Bond Street moves into third for world’s most expensive retail spot
Bond Street has leaped-frogged Tsim Sha Tsui in Hong Kong to take bronze in a list of the world’s most exclusive retail streets.
The shift bucks bucks fears about the decline of brick-and-mortar retail on the high-street and the so-called tourist tax, which has faced campaigners’ calls for scrappage.
The average rent on Bond Street was $1,762 (£1392), per square foot per year, according to Cushman & Wakefield, up 13 per cent year on year.
This trails $2,000 (£,1580) per square foot per year on Fifth Avenue in New York and $2,047 (£1618) per square foot per year on Milan’s Via Montenapoleone.
Rents in Regent Street and New Bond Street similarly grew 16 per cent and 13 per cent respectively, which equates to a £236 increase in the case of New Bond Street.
The list is a confirmation that retailers are increasingly focusing on a few key brick-and-mortar stores as part of their marketing strategy.
Bond Street accounted for 91 per cent of all central London retail investment in the second quarter, according to Savills.
“Showcasing innovation and brand presentation… build brand experience, which then translates into brand loyalty,” Cushman & Wakefield said.
“While e-commerce plays a role in an omni-channel strategy, it is the physical embodiment of the brand that customers connect with. For this reason, luxury brands continue to scour strategic locations in search of suitable space,” the company added.
The fight for London space is also a sign that the tourist-tax hasn’t put all visitors off purchasing luxury goods in the capital.
Under the previous scheme, which then-chancellor Rishi Sunak scrapped at the beginning of 2021, visitors could reclaim the VAT paid on their purchase, 20 per cent of the purchase price.
Retail businesses and a host of airports have since pleaded for the government to reinstate the tax break, warning that wealthy international shoppers will choose to splash their cash elsewhere.
Rents cross pre-pandemic benchmark
Rents across the 138 locations tracked in Cushman’s report were on average nearly six per cent above pre-pandemic levels due to strong rental growth of over four per cent year on year.
Cushman pointed to brands’ “underlying strength” as the reason for growth despite the slowdown in the luxury sector.
“It is not surprising that luxury brands have experienced a notable slowdown in revenue growth [but] the fact that companies continue to post overall growth reinforces many brands’ underlying strength.
More optimistically, as the pace of interest rate cuts gathers across the world, this will drive economic recovery and provide cost of living relief and real wage increases—all of which are significant tailwinds for the sector.
Luxury retail isn’t the only sector to see rising interest in quality, flagship spaces.
Last week, British property investment trust Land Securities, known as Landsec, hiked its forecast for the year after a rebound in occupancy and rental income in London.
In retail spaces, Landsec simialrly noted a trend from brand to fewer, bigger and better stores, with “significant upsizes and lettings” from leading brands such as Primark, Pull&Bear, Bershka, Sephora and JD Sports.
“Leading brands [are] prioritising quality over quantity when it comes to outlets, supporting occupancy rates and rents in Land Securities’ prime locations,” analysts at Panmure Liberium said.