The tourism boom prompted by the weakness of sterling since the Brexit vote has helped propel Bond Street in London into the top three of the world’s most expensive store locations.
The shopping thoroughfare overtook the Champs Élysées in Paris in the global ranking compiled by the property company Cushman & Wakefield. New York’s Upper Fifth Avenue retained its number one spot, followed by Causeway Bay in Hong Kong, with Via Montenapoleone in Milan fourth, ahead of the French boulevard.
Rents on Bond Street, home to some of the biggest names in luxury including Louis Vuitton, Chanel, Dior and Hermès, surged by nearly 40% in the year to June, according to the report. Demand was strong “despite the noise around Brexit” as record numbers of tourists took advantage of the low pound to stock up on branded goods, with Burberry among the retailers to have enjoyed a sales increase.
Cushman & Wakefield’s Darren Yates, the report’s author, said: “London’s major thoroughfares are some of the most desirable and expensive streets in the world.
“Although there was a pause in activity in London in the initial aftermath of the EU referendum, the start of 2017 brought a resurgence in leasing deals.”
Upper Fifth Avenue commands average annual rents of $3,000 (£2,280) per square foot, while Causeway Bay is on $2,725 after a 4.7% fall. Bond Street soared into third place after rents increased by 37.5% to $1,720.
Over the summer, there were concerns that Bond Street’s status was under threat after a number of retailers were said to be “quietly” marketing their leases due to the combination of high rental and business rate costs.
According to the business rates specialists CVS, Bond Street was one of the biggest victims of the shake-up in rates, with luxury retailers on Old and New Bond Street – they are commonly referred to as Bond Street – required to find an extra £160m over the next five years.
In the past, Bond Street tenants have stumped up millions of pounds of “key money” – the premium handed over to an existing retailer to buy their lease – in addition to the rent agreed, but property experts said the markets appeared to be cooling.
Yates said the steep rises on Bond Street could not “carry on for ever”, but added: “There has been a lot of talk about retailers wanting to leave Bond Street, but to my knowledge that’s not true. But I suspect that retailers will not be prepared to pay millions or tens of millions of pounds to get an incumbent out.”