London luxury retailers buy property to avoid rent hikes
London rental prices are through the roof, and it's not only affecting the people living in the city, but also the luxury retailers that have their stores there.
Of the £1.4bn of property sold on the city's premier luxury destination, Bond Street, since 2011, almost 70% has been bought by retailers. This is according to new research by property agent Cushman & Wakefield, compiled exclusively for The Independent.
Nearly half of the 80 properties on Bond Street were owned by the stores themselves, as of last year. Richemont, which owns Cartier among others, bought five Bond Street properties for £300m in 2014. It's believed that Spanish billionaire Amancio Ortega’s investment company, Ponte Gadea, paid over £400m for a stretch on Oxford Street earlier this year.
One of the reasons for the purchases is that retailers want to avoid rent hikes, and having to seek rent deals when sales fall.
Fergus Keane, senior director at Cushman & Wakefield’s West End team, said buying is seen as a safer option. “Landlords know there is so much competition for prime space that they can charge almost what they like as they know how important London flagships are for these retailers,” he stated.
“This has driven the retailers themselves, including some of the biggest luxury names in the world, to try and buy buildings for their own occupation, particularly in the West End where they can control their destiny and image for the long term.”
It's not true for all brands, however - luxury label Mulberry told The Independent that it leases its stores and has no intention of buying freeholds. Kering and Jimmy Choo also still mainly rent. Nevertheless, Keane says there's been an increase in luxury retailers seeking to lease and acquire property to occupy and trade from.
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