Baker Street, W1 is experiencing a significant change in its retail landscape, with a recent influx of high profile food and retail offers, impacting on existing rental levels, according to property firm Knight Frank. This demand has pushed rental levels to a new high of £265 per sq ft – a 38% increase from the previous high, a record level for the area.
Near zero vacancy rates and high rents on nearby Marylebone High Street, with the improved profile of the area for office occupiers, have led to retailers locating on to Baker Street. Operators are looking to take advantage of both the office and tourist population who flock to the area throughout the year, squeezing independent and local retailers out of the market.
In the past six months the Knight Frank retail team has completed five transactions that has resulted in five new occupiers coming to the area. On Upper Baker Street, north of Marylebone Road, Dunkin’ Donuts, Alef Bookshop and new burger restaurant Burgista have all taken space. These occupiers have grasped the opportunity that the Sherlock Holmes Museum and Madam Tussauds affords, whilst also utilising the close proximity to Marylebone and Baker Street stations.
Baker Street has evolved in recent years into a major office destination. Knight Frank claims it led the way in 2008 by locating its HQ at no.55 Baker Street and more recently British Land nearby have redeveloped 10 Portman Square and also provided 10,549sq ft of retail space.
The workers that these office schemes deliver are the target market for the ground floor occupiers. Over the past 12 months Baker Street has seen record breaking rents and premiums being paid in order to secure sites. This pattern is unlikely to change with yet another retailer selling their lease at 134 Baker St in excess of £500,000. ITSU recently broke the rental record by paying £265 per sq ft for its second unit, narrowly beating fellow sushi chain Wasabi. The recently opened Bills restaurant is also a positive addition to the casual dining offer, reportedly paying a premium of £400,000 for its site, from Ladbrokes.
As well as the proliferation of ‘grab and go’ food operators, the big supermarkets have also been keen to get a piece of the action with little Waitrose being a recent addition to the Street’s supermarket provision. The other big names such as Marks & Spencer, Selfridges, Sainsbury’s and Tesco’s provide a wider range of food shopping services to the workers, and tourists alike, with Sainsbury’s paying a six figure premium to secure its store at 116 Baker Street.
The variety in the offer doesn’t end there as many of coffee and grab ‘n’ go operators, Costa, Pret A Manger, Eat and Starbucks have committed to opening more than two units on Baker Street, with some having up to four stores, in an attempt to monopolise workers movements between the station and offices.
Over the next 12 months, the roads closest to Baker Street and Marylebone High Street, such as Marylebone Road, Paddington and, George Street, W1 are all expected to see a dramatic increase in retail activity, benefiting from the overspill of occupier demand, said Knight Frank. There is an upcoming commercial opportunity with the current redevelopment of 93 Baker Street, the previous Barclays Bank site, and the continued investment by TFL to upgrade the retail offer at the underground station with a Tesco Express due to open a the end of the month, the fifth within the Marylebone area.
Josh Braid, associate, Knight Frank Retail team, said: “Baker Street is currently experiencing an exciting new phase of Central London retail activity, and the rapid increase of grab ‘n’ go operators, due to the ‘over spill’ effect from traditional prime streets. Other secondary retail locations benefitting from this are Conduit Street, Lower Regent Street, Redchurch Street and Tottenham Court Road. All these locations have seen substantial increases of international retailers due to key redevelopments and the lack of space. “