The status of Bond Street as the UK’s most exclusive shopping destination is believed to be under threat, as one in four retailers on the famous street consider shutting up shop and moving out as a result of high rents and business rates.
About 25 of the 100 top fashion brands with stores on Old and New Bond Street are understood to have flagged to the property market that they are ready to vacate the fashion district, it was recently reported. Dolce & Gabbana, Hugo Boss, De Beers and DKNY are among the big brands understood to be considering their options.
Bond Street is the most expensive place in Britain to run a store. Nonetheless, it may appear like established fashion labels queue up to pay crazy sums of money to be associated with luxury lifestyle and set up the shop next to Miu Miu, Louis Vuitton, Dior, Hermes, De Beers, and alike. Well, the statement is apparently no longer true.
Paul Souber, of property consultancy Colliers International, was claimed to have admitted that a number of Bond Street leases were being “quietly marketed”. He further added: “London is still a phenomenally strong shopping environment, but the market has cooled. Retailers are looking at their stores and asking do we need to be on Bond Street or should we go somewhere else and get more bang for our buck?”
Just to give you a flavour of the sums of money in question, in 2014, Watches of Switzerland sold its Bond Street lease for £10m. While last year, Ralph Lauren-Polo set a new retail rent record on New Bond Street after it agreed to pay a staggering annual rent of £2,225 per sq ft for its store following a rent review.
A recent industry report by Walpole – that has since been removed from the original website – suggested the super-prime rental levels were becoming a problem. One prominent Bond Street occupier was quoted in the report: “Some sites are now so costly that there is a debate over whether it is possible to make a profit on them,” That was back in 2015.
Fast track to 2017, the recent business rate revaluation has hit hard some world renowned international brands, which are comparing the cost of operating a store on Bond Street with Madison Avenue and Fifth Avenue in New York, or Canton Road in Hong Kong. Just the same as up and coming UK designers chose to showcase their works at New York Fashion Week as opposed to London – same money for potentially better coverage, ‘cool’ crowd and possibly higher status of attendees.
Business rates are calculated as a proportion of the rental value. The rental value is supposed to be measured every five years, but the previous revaluation was controversially delayed by the government in 2015 for two years, making the changes that came into effect in April more pronounced, particularly in central London, where property values have surged in last 7 years. The biggest loser from the changes was Louis Vuitton, which has seen its rates bill increase by £10m. Both Dolce & Gabbana and DKNY’s bills have increased by more than £3m.
As evidence of a cool down over the past few years, some luxury brands were looking out for locations surrounding the high-end shopping district. Mount Street and Conduit Street in Mayfair are among those competing with the Bond Street. With brands like Marc Jacobs, Balenciaga, Céline, Giuseppe Zanotti and alike choosing nearby retail spaces, it seems like Bond Street is losing its power.
Some light relief on its way as Bond Street is investing £10m in sprucing up the street. Like having free mints given to you by the waiter after an extortionate bill at a restaurant.
“The biggest loser from the changes was Louis Vuitton, which has seen its rates bill increase by £10m. Both Dolce & Gabbana and DKNY’s bills have increased by more than £3m.”