Wetherell Mayfairs Fitnes Properties

Its retail rents are breaking records at £1,000 per square foot. What’s driving Mayfair’s headrush of super-luxury? Will it last? And are commercial property prices squeezing out Mayfair’s traditional business residents?

If you’ve played Monopoly recently, you might have noticed how the magnificent Mayfair doesn’t feature any more. Back in July, it was bumped off by the posh Kensington Gardens, reflecting a “shift in power”.

But soon the boardgame makers might want to reconsider their decision, and put Mayfair back in the game.

Why? Because Mayfair is flexing its retail rental and commercial property muscles like never before.

Italian luxury brand Salvatore Ferragamo this month signed up for a Bond Street space at nearly £1,000 per square foot, the UK’s most expensive retail rent paid in history. And French luxury brands are queueing up for the opulent postcodes of Mayfair.

Mayfair has become the property Pied Piper, luring super-rich shoppers and uber-cool retailers.
The mighty Bond Street

Bond Street

Bond Street’s supremacy as the UK’s most expensive shopping street justifies skyrocketing rents that luxury brands don’t mind paying. This is where the French fashion harbingers are always at loggerheads to get the attention of the well-heeled shoppers.

Just last week, Chanel was hoping to get planning approval from Westminster for an all-singing, all-dancing new shop front to pit itself against the jazzy retail face of its French foe Louis Vuitton.

Rents on nearby Oxford Street are on average only £200 per square foot, by comparison, and Marylebone High Street is around £225. Salvatore Ferragamo is paying five times that to be on Bond Street.

Cushman & Wakefield predicts that Bond Street rents could easily go up to £1,500 per square foot by 2013

But is £1,000 per square foot as good as it gets?

Maybe not.

Cushman & Wakefield predicts that Bond Street rents could easily go up to £1,500 per square foot by 2013.

“Records are meant to be broken, aren’t they?” says Duncan Gilliard, senior surveyor in the central London retail team at Cushman & Wakefield.

“The exclusivity a brand enjoys to be based on Bond street is why rents might break the £1,000 barrier as soon as next year. The street’s a must-visit for international tourists with big wallets, which is why it’s at the heart of the expansion plans for big luxury brands.”

This month, for example, British luxury brand Belstaff announced plans to move to Bond Street at a rental rate of £3m over 20 years. In December 2009, jeweller Piaget spent £965 per square foot to sell its stones from Bond Street.

Mount Street: the next best thing

This up-and-coming Mayfair elite street is definitely giving Bond Street a run for its money.

Owned by the Grosvenor Estate, the property company controlled by the Duke of Westminster, Mount Street boasts the most sought-after fashion and lifestyle brands.

Recent luxury boutique openings include Loewe, Lanvin, Ralph Lauren and Aesop. Some of Mayfair’s oldest, most established names such as Alfred Dunhill, Christian Louboutin, Marc Jacobs, Azzaro and Stephen Webster also strut their stuff on Mount Street.

And that’s not to mention the gourmet offerings of Mount St Deli and the high-end seafood restaurant Scotts. Or the colourful Mount Street gallery spaces.

Mount Street has been a silent backwater for many years compared to retail meccas like Oxford Street or Bond Street. But with its host of glossy new residents, it might just be on its way to stealing Bond Street’s crown.

“Mount Street undoubtedly attracts a far more elite crowd than Bond Street, Regent Street and Oxford Street together,” says Peter Wetherell, managing director of Wetherell, property specialists based in Mayfair for over 20 years.

“This is where multi-millionaires pop by in their chauffeur-driven cars, spend a fortune in the fashionable boutiques and then wine and dine in the best restaurants on the street.”

A testimony to the exclusivity of Mount Street is the fact that Grosvenor Estates makes brands pass a rigorous assessment to be based there. The brands are evaluated on everything from shop design to the pavement widths. Popular luxury brands such as The Kooples and Fabergé didn’t pass the test and were denied admission to this elite street.

“Grosvenor has been able to create a certain magnetism to the area by picking and choosing brands that can be based out of Mount Street,” says Wetherell. “The bar is very high which gives shoppers a very eclectic mix of things to spend their money on.”

Grosvenor has plans for strengthening retail flagship stores on Mount Street over the next year, which will add further credibility to the street’s existing boutiques and stores.

“Grosvenor’s recent focus has been on the further transformation of Mount Street as a desirable destination,” says Helen Franks, retail director for Grosvenor Estates. “This has included the redevelopment of the public realm space in July 2011, and the erection of an outstanding water feature ‘Silence’, by Japanese architect Tadao Ando, opposite The Connaught Hotel.”
How the French made Mayfair property très cher

South Molten Street

Back in September, we told you that 69 per cent of Bond Street property is now foreign-owned, and that the French own 13.6 per cent of the strip. French lifestyle brands can’t get enough of London.

In the past year alone, luxury French brands like Les Petites, Sandro, Maje, Aubade, Loft Design, Paula Ka, Gerard Darel and Vanessa Bruno have come to the capital. French brands already well established in London include Comptoir des Cotonniers, Agnes B, Anne Fontaine, Bonpoint and Zadig & Voltaire.

And Mayfair’s South Molton Street and Westbourne Grove are where the French retailers have made their presence felt the most. The streetscape is the answer to Le Marais, one of the hippest shopping districts in Paris.

The Mayfair effect: The boom is back

“French clothing chain Sandro is rumoured to have paid £800,000 as premium for 6 Marylebone High Street, such is the scale of the rents that the French will pay to be based in the exclusive streets of London,” says Cushman & Wakefield’s Gilliard.

“Their commitment to the London retail market has been cemented by their acquisition of stores alongside opening of concessions and ecommerce stores. In addition, their wide-ranging and prominent advertising campaigns such as ‘The Kooples couples’ appearing on numerous black taxis and London buses has increased their visibility,” he adds.

French brands typically snap up between 1,000 - 1,500 square foot in prime locations, often paying eye-watering premiums. South Molton Street and Westbourne Grove have both seen rents rise by 25 per cent over the last year.

One of the principal reasons for the price increase is demand from French retailers, coupled with the limited supply of available properties.

Gilliard explains: “Coming to London is a natural progression for French brands as the capital gives them the opportunity to sell their stuff to the countless nationalities and tourists. Also, as the French retailers can easily hop on the Eurostar to London and go back to Paris in a jiffy, it makes London the ideal place to plan global expansions.”

Mayfair’s hedge-funds: squeezed out of the property market?

The hegemony of hedge funds in Mayfair has lasted more than 20 years. Having an address in Mayfair means quite a bit to hedge-fund owners: it’s a status symbol that shows you have the money to pay some of the world’s most expensive rents.

But the economic downturn saw many big-name funds leaving Mayfair’s side in search of lower rents. Established names in the business like Brevan Howard and DE Shaw moved out the area for cheaper Baker Street.

“It’s not just cheap rents that prompted the exodus,” says Mat Oakley, head of commercial research team, Savills. “We saw a lot of hedge-fund companies getting lured to Geneva for less-stringent taxation and regulation.”

But it seems like the retail rates paid by superbrands aren’t affecting the industry too badly. The average rent to let office spaces in Mayfair is between £100 and £110 per square foot, and companies who want to be located in Mayfair often won’t bat an eyelid at that.

Hedge fund managers to ‘outspend bankers on London properties’

In a column for LondonlovesBusiness.com, Anthony Lorenz, founder of Lorenz Consultancy, writes: “The  majority of corporate occupiers’ total expenditure on rent, rates and service charges only amounts to between 10 - 12 per cent of their total outgoings. They are not that worried if there is a 10 - 20 per cent rise in rental values - they will pay what they have to.”

Property pundits might hail hedge-fund owners’ relationship with Mayfair, but with the Shard and other skyscrapers coming up on London’s skyline within the next few years will Mayfair loose its edge?

“Absolutely not, I don’t think the hedge fund owners would ditch Mayfair for the skyscrapers,” says Wetherell.

“Hedge funds have always been and will always be an intrinsic part of Mayfair. The sector is aware that being based out of Mayfair is extremely profitable and will deliver nothing but positive returns,” he adds.

Mayfair’s retail realm is going from strength to the strength. The hedge-fund industry still calls it home, and of course it’s got the Ferraris and Porsches wheeling in all day. Shouldn’t it make a comeback on the Monopoly board too?

By Shruti Tripathi
London Loves Business.com - 19th February 2012
Click to see original article

Modernisation plans have left traders worried that they might have to shut up shop.

Exit the London Underground at Green Park station, currently undergoing a £48 million renovation in time for the Olympics, and you undoubtedly feel right in the heart of the 21st century. Hedge fund managers stride purposefully to work near Berkeley Square, clutching latte comfort blankets. Tourists pick up a Boris Bike or head for the numerous international fashion brands on Old Bond Street.

Walk a few yards further, however, and you’re plunged back into the 19th century. The Burlington Arcade, opened in 1819 and relatively unchanged since, attracts four million visitors a year to its enclosed, red-carpeted corridor. Top-hatted beadles, a private police force recruited from Lord Cavendish’s 10th Hussars (the Arcade was his idea, to stop people throwing oyster shells, bottles and dead cats into his back garden), patrol the strip, checking that no one is whistling, running or opening umbrellas.

And while the upmarket prostitutes who used to operate in the rooms overhead have shifted their wares to the internet, many of the jewellery and luggage shops here are more than 100 years old. Hancocks has been making the Victoria Cross since 1856. Globe-Trotter has made suitcases for everyone from Churchill to the Queen, who used hers for her honeymoon.

Today, however, the Burlington Arcade is the focus of a row between new owners trying to renovate it for a high-end international market and a strange coalition of worried family jewellers supported by the likes of Michael Winner and Dame Judi Dench.

Back in January, Daniel Bexfield, a silver dealer who’s been in the trade for 30 years, 13 of them in the Burlington Arcade, was told by the new owners that his shop no longer fitted their desired image. Nothing personal, but when his lease came up for renewal in 2013, it would be quietly terminated.

Such an action is, of course, not unusual in itself and entirely the prerogative of the owners; the Burlington Arcade was bought for £104 million last year, split equally between Joseph Sitt, a New York-based property investor who runs Thor Equities, a hedge fund with lots of shopping malls in America, and Meyer Bergman, a European real estate investment and fund management firm. The Burlington Arcade, which was previously owned by another hedge fund – and before that the Prudential – has seen numerous shopkeepers come and go, from Montblanc pens to “A La Reine Astrid” chocolatiers. Top rents are now around £600 a square foot, more than double the average rent of £275 a square foot six years ago.

What gives the story more spice are the owners’ plans for the development of this historic site, which include employing a controversial architect, spending £5 million on a “blinged-up” redesign and, many allege, squeezing small shopkeepers with extortionate rents and demands for shares in their profits in the hope of replacing them with premium luxury brands such as Prada, Gucci and Chanel.

A sign already boasts that Jimmy Choo is “coming soon”. One shopkeeper, who did not want to be named, has said he was offered £1 million by a Russian, just to secure a lease. Gossip abounds of people turning up ostensibly to discuss new leases with shopkeepers, while carrying tape measures to size up the units for bigger, better clients.

“I love this arcade,” says Bexfield, a gentle man energised by the zeal of having nothing to lose. “It’s the last bastion of small business, it’s quintessentially British and it’s disappearing.” In the past few weeks he’s written to every MP and London councillor, while simultaneously piquing the interest of English Heritage, the Georgian Group (who campaign against the neglect of Georgian buildings) and a smattering of celebrities. His urgency is fuelled by the discovery, on the Westminster Council planning page, of an application to install uplighting, marble floors (Bexfield calls them “Dubai style”) and three large steel structures by Antony Gormley, creator of the Angel of the North. The consultation period closes early next month.

Bexfield is particularly incensed that Peter Marino, an American retail expert who likes to boast that his stores “aren’t built to last”, has been engaged to help with the design. “He is the Lady Gaga of architects,” says Bexfield, of a man known for his taste in leather biking clothes. “If I had a new fashion arcade in Bond Street, I’d definitely want him to design it. But the last thing I’d want him to do is restore a historic arcade.” Bexfield is not short of sympathisers on Burlington Arcade – although many refer inquiries back to head offices. “The ambience of the Burlington Arcade lends itself especially well to a brand like ours and we would sincerely hope that this respectful balance remains unchanged for the next 100 years,” says a careful Pippa Stephens, manager of Globe-Trotter.

Richard Ogden, a jeweller whose father moved to the arcade almost 60 years ago, is less prepared to pull his punches. “If this architect wants to dress up as one of the Village People that’s of no concern to me,” he says. “What is worrying is that the owners are interested only in making money, not in the arcade’s aesthetic or its history.”

The profit incentive to the owners in doing this is self-evident. Tourists spend more than £2 billion a year in this part of London. “If they can get big names in, they can negotiate on an international basis,” says Ogden.

Trevor Pickett, who’s been in the arcade for 32 years as managing director of Pickett, maker of luxury leather goods, injects a note of realism which he claims is shared by many of his neighbours.

“If you’re going to have a shop in a major thoroughfare, you have to pay,” he says, while taking pains to sympathise with Bexfield’s plight. “You can’t expect any landlord to take less than the market rent. If we’re squeezed out, we’re squeezed out. Otherwise the only solution would be some sort of charitable trust filled with nice nostalgic things that people look at but don’t buy.”

A spokesman for Meyer Bergman, the co-owner, has argued that their intention is to restore, not ruin, the arcade, pointing out that features such as the lights are no longer original. Pickett agrees that the new designs are “rather beautiful”, flooding with light the roof of the arcade, which is currently “rather dark and horrible in the winter”.

A couple of weeks ago Mark Lord, the Head Beadle, also weighed into the debate, writing a letter to the Westminster Chronicle in which he claimed to have witnessed a decline in visitors over the past nine years. The new owners’ plans would, he argued, protect jobs such as his own and look after the arcade’s historic character by reintroducing the daily unlocking-of-the-gates ceremony.

Thus the battle lines are drawn for a conflict over aesthetics and profits, nous and nostalgia, a nation of small shopkeepers facing an uncertain world of global finance. And just about the only thing one can say with certainty is that it’s not over yet.

“I’m going to start looking for a new place after Christmas,” says Bexfield. “But for now I’m focused on this campaign. This sort of thing is happening all over Britain. I don’t want to walk down a personality-free shopping mall. In 10 years’ time, if I’m not in the arcade, I’d like to be able to walk through it and say I had a hand in saving it.”

By Iain Hollingshead
26 Oct 2011 - The Telegraph

Click to see the original article

It has been established for years as the most expensive shopping district in one of the world's richest cities but, as Bond Street becomes more mainstream, Grosvenor is looking around the corner to give the super-wealthy the ultra-premium retail experience they seek.
The property investor plans to turn Mount Street and neighbouring Carlos Place in the heart of Mayfair into an exclusive enclave - a retail playground for the super-rich based on Avenue Montaigne in Paris.
Helen Franks, the head of retail and commercial lettings at Grosvenor, said: "Bond Street has become too accessible. Mount Street is not a passing-trade destination, We want people who will come here in their chauffeur-driven convertibles and buy ten pairs of Louboutin shoes."
On Mount Street the group, which has a sprawling property empire covering 300 acres of Mayfair and Belgravia, has five to ten brands vying for every vacant slot, Ms Franks said. "Demand is hugely outstripping supply."
This year Loewe, part of the French LVMH luxury stable, took a site on the street, while RRL, Ralph Lauren's jeans brand, is moving in this autumn. Grosvenor is talking to the perfumier Jo Malone about a concept store - Jo Loves - as well as Italy's Bottega Veneta and HermÈs crockery.
Mount Street's rise began with the arrival of Marc Jacobs in 2006, Ms Franks said. Since then, Grosvenor, which is investing £10 million in a "makeover" of the area, has signed Balenciaga, the Spanish high-fashion brand owned by PPR, another French conglomerate.
It is now targeting a list of ten "dream ticket" names, including Celine Givenchy, Erdem, Alaia, Chloé and Yves Saint Laurent, which it is "desperate" to place, Ms Franks said. With a vacancy rate of 3 to 4 per cent, a site comes free only once every six months. The developer frequently turns away stores, including the edgy French fashion newcomer The Kooples, which are deemed not to be sufficiently high-end.
Grosvenor is hoping to tempt wellestablished brands such as Christian Dior away from Sloane Square or Bond Street, providing that they give up their other locations. It will only accept retailers who are prepared to commit to a single store in the city.
The property group is also planning to redevelop Carlos Place to recreate French-style "maisons" - fashion houses with offices above the stores. Roland Mouret, the dressmaker, has already taken a site and the group is in talks to fill the house next door.
Rents on the lesser-known streets are £325 a sq ft, compared with about £950 on Bond Street, and the conversion rate of browsing to buying is "very high" compared with elsewhere in the West End, Ms Franks said.
She said there had been no friction with landlords on Sloane Street or Bond Street over poaching suggestions.
"A vacancy on Bond Street goes in nanoseconds," she said.
The Mount Street clientele fall into fashionista types and "affluent, wellheeled Brits and Europeans" with fewer visitors from the Middle East compared with the rest of the quarter. The Mount Street redevelopment should be complete by 2016, Grosvenor said. 'We want people to be chauffered here and buy ten pairs of Louboutins'

The plan is to turn Mount Street into a retail playground for the super-rich

By Emily Ford - The Times - 17th October 2011