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The pulling power of luxury brands has pushed up the cost of renting the best retail space in one Mayfair street by a recession-defying 330 per cent Before July 2006, Mount Street, London W1, was home to a number of arts and antiques dealers and was considered more of a through route from Berkeley Square to Park Lane than a destination in itself. Then came the designer clothes store Marc Jacobs, with the letting of 24/25 Mount Street. Since then, rents for the best space — the first 20ft from the store entrance — have risen from £90 a sq ft to £300 as other designer retailers have clamoured to benefit from the “Jacobs effect”.
Mount Street is now also home to Balenciaga, Lanvin and Louboutin. The most recent addition is the Mount Street Deli, the newest venture from restaurateur Richard Caring, owner of Le Caprice and The Ivy.
Sarah-Jane Curtis, retail investment director for Grosvenor, the property investor, said: “Some retailers are coy about talking about their trading figures, but this is sometimes because they are embarrassed they have done so well even during the recession. The view is that their customers, who are the über-rich, may have lost a couple of billion but still have a few left.”
Despite the rapid rise in rental values, Grosvenor says that the introduction of new designers has served to bring rents in the street in line with other Mayfair shopping destinations, such as Bruton Street, rather than inflating them to above-average levels.
The property company, which owns 300 acres of real estate in Mayfair and Belgravia, says that Mount Street is still way behind rents in Bond Street, which can be between £800 and £900 a sq ft. However, its appeal is on the rise and the company “often receives offers in excess of £300 per sq ft”, according to a spokesman. Ms Curtis said there was a waiting list of designers who wish to be on the street.
Rents in Mount Street are likely to rise further once improvement works are completed. According to the summary of plans, these will “create new possibilities for parking”, which could be of benefit to customers of Mount Street stores. These people, according to Ms Curtis, “are typically chauffeur-driven to the door”.
Residential property values in the street have benefited from the arrival of the shops, as well as the higher than average increase in property prices in Mayfair, which are now back to peak 2007 levels. Ms Curtis said: “This is one of the only areas in the country where it is actually considered desirable to live above a shop.”
Landlords elsewhere in the West End of London have also started to recover this year. Retail rents in the area have performed strongly in the past six months, according to Shaftesbury, the property investment company. Shaftesbury reported that the West End was prospering, with good demand from tenants and more visitors.
Returns on retail property rose by 1.1 per cent in May, according to the property adviser CBRE, bringing the average return in the past 12 months to 9.1 per cent.
Grosvenor invests on behalf of the Grosvenor Trusts, which were established for the benefit of current and future members of the Grosvenor family, headed by the 6th Duke of Westminster.
