london midtown retail bulletin - farebrother€¦ · labour mayor of london - not to mention the...
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Sep2016
120Holborn,EC1GymboxRent: £912,000Size: 38,000 sq ftHeadline: £24 psf
Victoria HouseSouthamptonRow, WC1
Oct2016
UNIT 3
RUSH Hair SalonRent: £60,000 pa (6M RF)Size: 1,220 sq ftHeadline: £120 ZA
Sep2016
23Performance GroundRent: £130,000 paSize: 3,400 sq ftZone A: £38 sq ft
Kingsway,WC2
HolbornViaduct, EC1
Jun2016
60Mas Q MenosRent: £80,000 pa (passing)Size: 1,605 sq ftPremium: £65,000
We have witnessed an eventful six months since our last bulletin with the UK announcing its decision to leave the European Union, a surprise change in Number 10 and a new Labour Mayor of London - not to mention the recent election result in the United States! However, despite the uncertainties surrounding such political shifts, the Midtown retail market remained resoundingly buoyant throughout the usually quieter summer months and a number of exciting retail and leisure transactions have taken place.
Key transactions have included national retailers expanding their existing portfolios; RUSH Hair and Superdrug have taken space at
Southampton Row’s Victoria House, WC1, and 133 Clerkenwell Road, WC1, respectively.
There has also been activity from overseas occupiers. Minamoto Kitchoan, who occupy stores in Japan, New York and Singapore, has taken their second UK site at 448 Strand, WC2, reflecting a rent equating to £400 Zone A.
More recently in the leisure market, Gymbox acquired a staggering 38,000 sq ft of basement space at a headline rent of £24 per sq ft, whilst nearby at 23 Kingsway, WC2, Performance Ground took over 3,000 sq ft of basement space at a headline level of circa £38 per sq ft.
LONDON MIDTOWN
RETAIL BULLETINwww.farebrother.com
KEY RETAIL TRANSACTIONS
With the new Rating list to take effect from 1st April 2017, Rateable Values (RVs) will be based on April 2015 rents - in high contrast to current RVs which are based on April 2008 rents. As rental growth has been significant across much of Midtown during this period, many retailers are now facing a large increase to their occupational costs.
While the Government’s confirmed transitional relief will be a welcome buffer for many, those properties with a RV in excess of £100,000 will
still see a sharp increase from the outset. For example, where a property with a current RV of £120,000 receives a 70% increase to £204,000, the occupier would be paying the full amount by 2018/2019, equating to an increase of approximately £40,000 to the current Rates Payable.
There is a mixed picture for RV increases in Midtown, with Strand seeing increases of 40-70% and High Holborn 40-60%, while Fleet Street will see anything from 0% to 20%.
Exmouth Market is also an interesting example, where we will see increases of 70% to 80%, but with RVs at sub £100,000, the transitional relief will make a significant difference to the largely independent tenant base.
There is real potential for these changes to have an impact on the market. Where we see large increases, retailers are likely to use this as leverage in rental negotiations which could see rental growth stall or even reverse in the short to medium-term.
Independent retailers will feel the strain more than others. Where larger national operators will be able to absorb increased costs, or indeed balance them across a portfolio where some properties see a decrease, it will be an unwelcome burden for smaller operators, particularly at a time of economic uncertainty.
Whether you are a landlord or a tenant, the key is to be prepared. Get in touch if you would like to discuss the consequences for your business ([email protected]).
IN NEED OF SOME URGENT R&R (RATES & RETAIL)
Autumn / Winter 2016
Aug2016
133Clerkenwell Road, WC1SuperdrugRent: £75,000 paSize: 1,630 sq ftZone A: £65 psf
• RETAIL MARKET REMAINS BUOYANTHEADLINES
Photo: BRIKI, Exmouth Market, EC1
Photo: Exmouth Market, EC1
• PREPARE FOR 2017 RATING LIST • RETAIL HOTSPOT, STRAND, WC2
Gymbox 120 HOLBORN, EC1
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AVERAGE ZONE A RENTAL CHANGE HIGHEST RENTAL INCREASE SEEN
RENTAL COMPARISON BETWEEN CURRENT RATING LIST (2010 BASED ON 2008 RENTS) AND THE NEW LIST (2017 BASED ON APRIL 2010 RENTS)
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is now the largest gym in central London.
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EXISTING GROUND FLOOR L AND USES (MAPPED EARLY 2014)
The main thoroughfare linking the Cities of Westminster and London, Strand is one of the big retail players in Midtown and it’s easy to see why. Thomas Twining recognised the strength of pitch by opening a tea shop at 216 Strand, WC2, back in 1706 and, 300 years later, it remains there as other occupiers compete for space, as is evidenced by a continuing rise in rents. Unlike its flagging easterly counterpart, Fleet Street, the vibrant mix of retail, restaurant and leisure uses, all add to its draw, and if the Northbank BID has anything to do with it, there will be many more very welcome improvements to follow.
The western end, around Charing Cross Station, is the prime pitch with the Accessorize letting at 443 Strand, WC2, earlier this year showing a Zone A of £341 per sq ft. Perhaps as a sign of things to come, the rent agreed next door at 448 Strand, WC2, in the letting to Minamoto Kitchoan, equated to £400 per sq ft. When comparing this to a Zone A of circa £280 per sq ft achieved in September 2014 on the Pret at 421-422 Strand, WC2, it’s clear just how quickly the market has moved.
Additionally, there have been several instances of premiums in excess of £250,000 being paid
for existing leases, providing further evidence of the strength of occupational demand.
Heading east, the tone falls slightly with the Zone A in the central section of Strand at around £250 per sq ft in 2014 and now approaching £300 per sq ft. Around Waterloo Bridge, the tone is currently closer to £200 per sq ft, falling around Somerset House, WC2, to circa £100 per sq ft, before improving as Strand becomes Fleet Street.
There is definitely room for improvement and growth at the easterly end of the street and the completion of St Edward’s mixed-use, but residential led, scheme at 190 Strand, WC2, will be a great start. We also have the proposed redevelopment of 180 Strand, WC2, the proposed Garden Bridge and the proposed creation of a new public square aroundSt Mary Le Grand which would also contribute to a revival of the retail pitch.
Represented byMatt Martin, Petersham Nurseries, the internationally prized brand with their home in Richmond, has signed a Pre-let for 16,000 sq ft at Capco’s Kings Court development in Covent Garden. Comprising two restaurants opening onto a newly created courtyard, as well as two retail stores fronting King Street, they will be fitting out early in the new year and their unique concept will be unveiled inthe summer, 2017.
MATT MARTINLeasing+44 20 7855 [email protected]
FAR FROM STRANDED
CAN WE HELP YOU?
This publication has been carefully prepared and it is intended for general guidance only. No responsibility is accepted by Farebrother for any errors or omissions. The information contained herein should not be relied upon to replace professional advice on specific matters and is not, in whole or in part, to be published, reproduced or referred to without prior approval. Information may be subject to revisions in subsequent editions. ©2016 Farebrother. All rights reserved.
farebrother.com | +44 20 7405 4545 | farebrotherstreetguide.com | @farebrotherre
NEIL DAVIESLeasing+44 20 7855 [email protected]
BECKY THORNELeasing+44 20 7855 [email protected]
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EXISTING GROUND FLOOR L AND USES (MAPPED EARLY 2014)
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Institution/high commission
Education
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Hotel
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Caf é
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Retail high street
Retail local
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Attraction/museum/art gallery
Other
Vacant
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EXISTING GROUND FLOOR L AND USES (MAPPED EARLY 2014)
J OHN AD AM ST R E ET
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ALDWYC H
INDI A PL A C EMO N T R E AL P LAC
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MAP BY NORTHBANK BID
Commercial
Residential
Green space
Legal
Government
Institution/high commission
Education
Religious
Hotel
Bar/pub
Restaurant
Caf é
Retail tourist
Retail high street
Retail local
Retail independent
Theatre
Attraction/museum/art gallery
Other
Vacant
Construction
EXISTING GROUND FLOOR L AND USES (MAPPED EARLY 2014)
HUGH TIPPETTBusiness Rates / Lease Advisory+44 20 7855 [email protected]
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