Agglomeration Of The Decade

From The Evening Standard:

Five years ago it was the West End's “cashmere alley,” a tired collection of Scottish knitware shops, airline offices, high street chains and faux “England-land” heritage stores.

The arrival of the Apple Store - the first outside America - exactly half a decade ago today - has transformed Regent Street into one of Europe's leading retail shopping destinations with an enviable and growing collection of global brands. Retail experts say the arrival of Apple - where takings are a remarkable £60 million a year - acted as a catalyst that allowed Regent Street to throw off its spinsterish image as Oxford Street's tartan clad maiden aunt...

Even in the depths of the recession Regent Street has no empty space “from Circus to Circus” and only 2000 sq ft on its northern stretch, Mr Shaw said. That gives it an overall vacancy rate of 0.03 per cent compared with 4.5 per cent across the West End as whole and 11 per cent nationally.

The “Apple effect” has also had a dramatic impact on rents, which have risen around 25 per cent since then compared with 0 to 10 per cent in the West End as a whole. While rents, which range from around £275 to £450 per square foot are still at a discount to Oxford Street, the gap is closing...

OK. Breathe in, relax, breathe out, think ...

Apple operates in a free-ish market, it looked at the cost/benefit of various locations for its new shop and went for Regent Street, invested a shedload of money in refurbishment, fancy glass staircase etc. This attracts more shoppers, so at first, tenants of surrounding shops benefit as well. So more stores want to open up there, so the landlord can put up the rents, by 25% (if the article is to be believed).

The less profitable shops can't keep up with the new rents and go out of business, and other, more profitable shops (who generate sufficient profits to be able to afford the new, higher rents) move in. Which attracts more shoppers, so rents get nudged up a bit more etc.

As a result of all this, by the time Apple's lease comes up for renewal, they'll find that their rent has gone up by fifty per cent, in other words, they'll have the privilege of paying over the odds to be near people who are themselves paying over the odds to be near Apple, and so on ad infinitum.

Seriously, which party has benefitted most from Apple's decision to move there while putting in least effort? It's a simple question with a simple answer, you just have to be honest.