With a buoyant market and great demand for key central London locations, Duncan Lillie, managing director of Shelley Sandzer Professional Services, asks where does this leave new and aspiring operators looking to acquire their first sites or in the early stages of organic growth?
Central London is experiencing record rents and premiums for new and existing restaurants. Over the last five years, Berkeley Square has reached £180psf; Berkeley Street £150psf; Kingley Street £130psf and Covent Garden £150 psf.
If you are looking amongst these hotspots, there are still opportunities to acquire sites at what some would consider more affordable rents. Being prepared to think outside the box a little bit and take the road less travelled, in some cases literally, can pay dividends further down the line.
Rents in Great Portland Street now exceed £100psf although a few hundred yards to the north in Great Titchfield Street, rents are only £60psf. Riding House Café has demonstrated exactly what can be achieved in these more affordable locations. They acquired a site in Great Titchfield Street, which had traded poorly in the past, and turned it into a trendy lunchtime and evening destination whilst maintaining their overheads at an affordable level.
Similarly, Mount Street and Queen Street, Mayfair, attract rents of circa £85-90psf. They are only a short distance from Berkeley Square where rents are twice this amount. However, restaurants that rely on destination can also consider areas such as the lower end of St. James’ where rents are circa £85psf as Piccadilly. For operators that still require passing trade but want to avoid the high value areas around central Covent Garden area like Piazza and Wellington Street, could consider sites in Queen Street, which are at circa £55-60psf.
These scenarios are repeated in numerous locations around Central London. It is not that these lower rented areas attract lower rents because they are severely compromised in terms of location, it is just that they lack the all-important profile sought by overseas operators and more established restaurant groups.
A typical ground floor site of 3,500 sq. ft. with a basement of 2,500 sq. ft. can be acquired for at least £100,000 per annum, much less than their more high profile counterparts.
It is only a matter of time before these areas are seen to be good value for money, so now is the right time to consider such locations when opportunities become available.
