From The Evening Standard:
In Old Bond Street, Italian luxury goods house Salvatore Ferragamo is finalising a deal to extend its lease at number 24, and is set to pay a rent equating to around £1,000 per square foot zone A - the industry measure for rent calculated by the most valuable part of the store.
The 3000-square-foot store will become the most expensive shop in the country, beating the previous record of £965 set by jeweller Piaget in 2009. In New Bond Street, British brand Belstaff has agreed to pay £3 million in rent for numbers 135-137 - a 25,000-square-foot store - equating to £840 zone A.
Zone A just refers to the very front of the shop, not the back or the upper floors; the second example averages out at £120/sq ft, so that might be a mix of 2,500 sq ft @ £840 and the remainder at £40/sq ft (for example).
You can cross-reference with the Valuation Office Agency's figures. The VOA say that one-fifth of the space at number 137 is Zone A, with a rental value of £425/sq ft, instead of one-tenth with a rental value of £840/sq ft, but the overall average comes out the same either way.
Nonetheless, even the average of £120/sq ft is heck of a lot of money, that equates to a site only rental value of £5 million/acre per year, or a potential selling price of £100 million/acre, which seems 'about right', seeing as the Chelsea Barracks site sold for £70 million per acre four years ago.
Tuesday, 7 February 2012
Location, location, location!
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5 comments:
The question is of course why people want to be there and why consumers want to go there to pay over inflated price. Totally defying rational economic logic but then people (especially those with a silver spoon, aren't exactly rational...)
EBM
EBM, any spending above and beyond a bare subsistence level can be described as irrational. I wouldn't waste a penny on a flash new car or golf club membership; but others might think I am mad to send my kids to private school. Each to his own.
Furthermore, 'conspicuous consumption' has been a human trait ever since there were humans, we wouldn't be humans if we didn't have this urge to keep ahead of the Joneses.
Got a tailor client who made suits for Gieves and Hawkes. He charged G & H about £1000 / £1200 each one. G & H sell them for £3,000 to £5,000. The difference is mainly rent...
It amazes me how sole traders /local shops underutilize their shop window. Some round here have nothing to see or even have the window blocked by an outdated sign or the back of a display case that points into the shop. They pay high street overheads so fill that window with products surely.
I could probably afford one of the loo cubicles if I saved up.
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