The level of rent per sq ft for a new lease in London’s Mayfair has risen by 67% over the last five years to stand at £125, predominantly driven by new international concepts, according to new research by Colliers International.
The new study found that the level of rent per sq ft for a new lease in Charlotte Street has climbed 41% over the past five years to £95; Covent Garden by 33% to £200; Soho by 38% to £110 and Spitalfields by 63% to £65.
It also showed that that the level of rent per sq ft for a new lease in Marylebone has increased by 38% over the past five years to £90; Southbank by 50% to £60; One New Change by 43% to £50 and Bishopsgate by 33% to £60.
Ross Kirton, director at Colliers International said: “Demand in Mayfair is almost exclusively from the premium/fine dining segment of the market and is now being predominantly led by new international concepts looking for representation in London.
“Around two thirds of recent lettings in prime Mayfair locations have been to international operators. Berkeley Street has quickly become a particularly favoured pitch for international restaurant concepts with a new and exciting line up emerging to join Novikov and Nobu.
“This influx has driven up the entry costs and enabled landlords to be extremely selective when accepting new offers. The marketing of the former NatWest bank building on Berkeley Square vividly illustrated this when Caprice Holdings had to beat off competition from 17 other high quality operators for the prominent corner unit at a rent of £1.1m.
“In these circumstances, it’s not surprising that leases are changing hands for multimillion pound premiums. Historically the level of premium that was paid for a lease was predicated on a multiple of net profit. However, in such a fiercely competitive market this correlation no longer applies: operators are essentially prepared to pay substantial ‘key money’ purely to get a foothold in Mayfair.”