London's Bond Street and the west are prove to be the world's prime location for luxury boutiques, with key retail spaces soaring in value. Luxury retailers are linked to more than £250m ($385m) of the acquisition of properties around the primeWest End spot, says CB Richard Ellis, a property consultancy, helping to send capital values past their previous peak for well-located buildings.
International shoppers continued to flock to the west End for luxury retail goods, which has meant that some retailers in the sector have been eager to expand into property ownership as well as occupation of the well-placed outlets in the best parts of Bond Street and Oxford Street.
Retailer owners now represent about a quarter of the key jewellery quarter between Conduit Street and Piccadilly, for example, according to CB Richard Ellis, up from less than 15 per cent of ownership on the street two years ago.
Active retailers have included Hermès, Max Mara, Chanel and Louis Vuitton Moët Hennessy, while other deals have been completed by more mainstream retailers such as H&M and Bestseller.
Some retailers have acquired stores for their own use, looking to own the buildings in which they spend tens of millions of pounds on glamorous interiors. Others have seen acquisitions as a hedge against the high rents that they are paying elsewhere, allowing them to generate income from competitors.
Phil Cann, executive director for retail capital markets at CBRE, said the move into ownership reflects a spike in rents.
“The competition for key retail stores is so great that retailers are prepared to take a long-term view to secure representation through ownership of prime buildings. The rental increases have been driven by investment by retailers in improving their stores and lease premiums, the cost of which often represents a large proportion of the value of buildings.”
Image: Chanel Bond Street
Source: Financial Times