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As everyone is surely now aware, commercial property in the UK has been re-rated using 2015 values, with the new values set to be introduced in April 2017. Unfortunately for London this means a fairly dramatic increase in rates for businesses, especially in areas that have seen high rental growth (rents on Bond Street, W1, over the last five years have gone from an average of £950 per sq ft to the record-breaking £2,225 per sq ft at Ralph Lauren’s HQ).
The drop in the value of the pound has temporarily boosted luxury retailers, but generally speaking there has been a reduction in the number of stores over the last few years, and a huge increase in rates will certainly not improve the situation. This is most evident on Bond Street, traditionally the heartland of luxury retail, where vacancy rates are incredibly low and when a property does become available it is snapped up for an exorbitant price.
Five retailers who occupy almost 21,000 sq ft on Bond Street have put their leases up for sale in 2016. Belstaff is looking for a £7 million premium for their flagship store, Ralph Lauren’s Children’s Store is seeking a £4 million premium, Watches of Switzerland and Ermenegildo Zenga are moving out and Camper Shoes also wants to obtain a £4 million premium.
Eugene O’Sullivan, a Surveyor and Managing Director at Morgan Pryce says; “Average rates on Bond Street will increase from circa £380 to £720 per sq ft in Zone A, which has already been mirrored by another leading real estate firm”.
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.