The Rise and Rise of

Londons Luxury Quarter

Retail Intelligence

02 | Jones Lang LaSalle

Introduction
The global appetite for luxury retailing is growing and London is at the
forefront of this growth. Mayfair, St Jamess and the surrounding streets
have seen a rapid expansion of the luxury offering in recent years,
cementing their role as the leading destination for luxury retailing in
the Capital. New West End Company and Heart of London Business
Alliance, which together represent over 1,000 businesses, recognised
this growth and as a result two years ago created the London Luxury
Quarter to transform the area into a valuable entity that can be
marketed globally.
Jones Lang LaSalle has been commissioned by the New West
End Company and Heart of London Business Alliance to define the
boundary of the London Luxury Quarter and to identify and understand
its make-up and future growth prospects.

London Luxury Quarter | 01

The global luxury

retail market
A resilient and growing sector
The global luxury market has remained relatively sheltered from the economic crisis. Despite a short
period of slower sales in 2009, it bounced back in 2010 and continued to flourish throughout 2011 and
into 2012. Whilst economic uncertainty has deterred most global middle-income shoppers, affluent
Western shoppers have flocked back to the premium brands, which together with economic growth in the
BRIC nations and an insatiable appetite for luxury goods in the Far East, has driven growth in the luxury
goods market globally.
According to retail expert Verdict, the global luxury goods market witnessed strong growth to 2010, and
is currently valued at $320bn. Verdicts recent forecasts suggest that this expansionary trend is set to
continue with estimates valuing the market at around $500bn by 2015.
Europe remains the largest luxury goods market with over $117bn being spent on luxury branded
products in 2010 however, Asia Pacific is the only market not to have suffered a drop in luxury sales
in 2009 and is set to experience unprecedented growth over the next five years, rapidly closing in on
Europes number one position. By 2015 Asia Pacifics luxury goods market is expected to be valued
at $144bn, up 92% on todays valuation. The growing wealth creation in the Asia Pacific region, most
notably throughout China, and the sheer volume and size of its densely populated cities, has made it a
very attractive destination for luxury retailers.

02 | Jones Lang LaSalle

Map 1 Global expenditure on luxury branded products by region 2005 2015(f) ($bn)

Europe
82.8
2005

117
2010

175.6

Japan

2015

38.1

Americas
2005
57.6

74.7

2005

2010

2015

10

2005

222

2010

320

2015

499

2015

Asia Pacific
(excl. Japan)

Middle East & Others

2005

Total ($bn)

2010

110.8

29.4

Year

39.4
36.2

17.6
2010

33.7

2015

2005

75
2010

144.1
2015

Source: Verdict Research

As a result, the Global Luxury Houses have emerged from the financial crisis much faster and stronger than most businesses.
Burberry, Gucci Group, Hermes, LVMH, Polo Ralph Lauren and Richemont have all revealed strong sales growth, with some
recording record sales in the last year. Expanding store networks has driven growth, particularly across the Asia Pacific region,
where retail operations typically outperform the rest of the business elsewhere in the world. Despite this rapidly expanding region,
London and the West remains a core, mature and key market for international luxury retail.

London Luxury Quarter | 03

Why London?
A leading global city with destination appeal
London ranks number one in the world in terms of international
visitors, with close to 17 million expected in 2012, up 1.1% on 2011
(Mastercard Global Destination Cities Index, 2012). In Jones Lang
LaSalles Global 300 ranking, which ranks global cities based on
population GDP, connectivity, corporate presence, office stock and
real estate investment volumes, it comes in third, just behind New
York and Tokyo but ahead of its European counterparts Paris and
Madrid.
Londons diverse DNA is undoubtedly its unique selling point.
Investors, retailers and shoppers are not only attracted to the city
because of its position as a top global financial powerhouse, but also
because it is steeped in history and has a strong heritage.
As a retail destination, London ranks alongside the best leading
global cities, including New York, Paris, Milan, Hong Kong and
Shanghai. Its diverse offer has global retail appeal and it is often the
first port of call for international brands when looking to expand into
Europe. According to Jones Lang LaSalles 2011 Cross Border Retail
report, London ranks number one in Europe, boasting the largest
number of international brands when compared to 55 other leading
European cities.

Liquidity even in the worst market conditions, there is an exit

strategy for investors. London is perceived as a mature and
transparent market, making it an attractive investor destination.
Stock London is the biggest market in Europe there is quality
real estate stock readily available, with new leases to high calibre
occupiers.
Lease Lengths the institutional nature of UK real estate has
created an investment market geared towards the investor. Leases
are typically longer than for the rest of the UK, and in many cases
secured on a better quality of building than in other global markets.
Tenure the guarantee of title may be taken for granted by domestic
investors, but not by overseas investors. Freehold is the most
desired tenure for many, but more experienced overseas investors
are embracing the leasehold structure.
Transparency independent research, data and industry scrutiny
from the press, advisors and equity analysts all serve to create
a very transparent and comprehensible market. The Jones
Lang LaSalle Transparency index ranks the UK as the 3rd most
transparent real estate market globally (retail adjusted) after the US
and the Netherlands.

There are a whole host of drivers that make London attractive and
successful, but understanding its make-up is crucial for anyone
looking to invest in the city, be it a retailer looking to open a
flagship store, or an international investor looking for investment
opportunities.

Professional Advice the law firms and surveying practices

operating in London often come with a platform which enables a
consistent level of advice across the globe. In such a competitive
market it is also a source of comfort that there is no monopolistic
practice.

Jones Lang LaSalle has identified 12 key components that make

London stand out ahead of its global competitors for visitors,
retailers and real estate investors alike:

Tax UK investment offers an investor-friendly regulatory framework

and tax regime to overseas investors, with no barriers to real estate
ownership and to the transfer of funds in and out of the country.

Global Financial Centre Londons position as a top financial

centre brings with it real estate that is fit for purpose for global
occupiers with strong covenants. While Londons exposure to
financial & business services increases market volatility, its top
ranking position undoubtedly channels global capital and attracts
leading global enterprise.

Currency the devaluation of Sterling after the 2008 global

economic crisis made the price of UK real estate even more
competitive, and divesting out of riskier currencies into Sterling has
emerged as a contemporary defensive play. With recent uncertainty
in the Eurozone, Sterling has increased its appeal to many global
investors.

04 | Jones Lang LaSalle

Familiarity a soft factor maybe, but a very

important one. Investors naturally prefer to invest
in areas which they are familiar with. In London,
this has sometimes rather patronisingly been
described as a monopoly board mentality, but
in reality it derives from investors already having
strong cultural (or even colonial) links with London,
as well as a working knowledge of assets and
strategy, either directly or from contemporaries.
Schooling & Education home to globally
recognised schools and universities, for higher
net worth investors, schooling of relatives has
provided familiarity and an opportunity to purchase
residential property. This fosters an understanding
of London real estate practice which migrates
into the commercial sector. The escalation in
tuition fees has already driven more overseas
students into our universities at the expense of
domestic students. According to UCAS there were
1.8 million full time undergraduate students in
higher education last year, of which 5.7% were
international.
Heritage, Culture & Language multi-cultural
London (reports suggest one in three Londoners
are from an ethnic minority group), heritage,
quality of life (especially for higher net worths) and
the English language make London an attractive
place to invest, work and live.
Each of the 12 factors above play their part
in contributing to Londons global appeal and
success. History has demonstrated that should
temporary competitiveness be lost in some areas,
London has a strong and broad based DNA that
more than compensates, and helps it retain its
strong, leading global position.

London Luxury Quarter | 05

The London Luxury

Quarter
LONDON LUXURY
QUARTER - FAST
FACTS:
42 Streets and Arcades
Over 1,000 units
2.8 million ft of space
A
 ttracts c. 3bn of retail
spend per annum (source:
NWEC)
S
 howcases over two-thirds
of the worlds top 100 luxury
brands.
H
 ome to over 60% of
all jewellery retailers
in Londons West End.
occupying c. 90,000 ft of
space
8 9 art galleries and home to
the Royal Academy of Arts
6 five star hotels with global
appeal
1 4 Michelin stars awarded
to a variety of top class
restaurants

06 | Jones Lang LaSalle

Established and still expanding

Luxury retailing in London is synonymous with legacy,
core retail locations. Old Bond Street and New Bond
Street are iconic. However, with the growth of the
global luxury market and the increasing demand
for space, luxury retailers are looking beyond the
traditional core. Following a decade of investment,
growth areas have emerged across London, such
as Covent Garden, Notting Hill and Marylebone High
Street, each attracting luxury retailers in their own
right. However, the traditional luxury core in Mayfair
remains the primary focus for premium brands in
London.
As such, in recent years there has been a
geographical expansion of the core to what can
now be defined as the London Luxury Quarter.
Whilst New and Old Bond Street remain at its
heart, new contiguous areas have emerged and

Map 2 The London Luxury Quarter

new development and inward investment from

landlords and retailers alike is likely to see its
continued expansion. Map 2 highlights the extent
of the London Luxury Quarter as it stands today.
The Quarter comprises 42 streets and arcades
across 2.8 million ft of floorspace. From St
Jamess in the south, its boundary extends to
Bond Street tube station in the north, whilst
stretching to include Mount Street to the west and
Savile Row to the east. In total it encompasses
over 1,000 units, including British retailers
Selfridges, Liberty and Fortnum & Mason and the
five star Langham Hotel, which flank the Quarters
extremities. Recent estimates from the New West
End Company (NWEC) suggest that in total the
Quarter attracts in the region of 3bn of retail
spend per annum.

Best of British
Set within the heart of London, and surrounded by the heritage
and culture of Mayfair, the Quarter showcases some of the best
of British luxury retailers. From the Mulberry and Alexander
McQueen flagships stores on Bond Street, to the Stella McCartney
and Matthew Williamson stores on Bruton Street, it is the go-to
destination in London for those seeking the latest British trends.
Savile Row, famed all over the world for its traditional mens bespoke
tailoring, is anchored by Gieves & Hawkes, a brand internationally
recognised for its quintessentially British style and craftsmanship.
British jeweller Asprey, a brand synonymous with refinement and
luxury, and menswear retailer Alfred Dunhill also have stores within
the boundaries of the Quarter. High-end British fashion brands
Belstaff and Burberry are continuing to embrace their roots by
reaffirming their commitment to the area with new flagship stores.
But competition for space is fierce; Belstaff recently agreed a record
rent for a store in the traditional core.

Leading the way for International brands

The Quarter also has a strong presence from international luxury
brands, highlighting its global appeal. French fashion houses
Hermes and Chanel have resided in the Quarter for over 30 years,
and later this year Chanel will open a second store which will more
than quadruple its floorspace in the area. Louis Vuitton cemented its
presence in 2010 when it opened a new flagship store, and earlier
this year Italian shoe and accessories retailer Salvatore Ferragamo
extended the lease and size of its New Bond Street store. Missoni
has revealed plans to open a second store in the Quarter, and Swiss
jeweller Piaget has secured a central pitch.
More recent international arrivals include Fendi, which has agreed
a deal to open a flagship and European HQ in the former Mallet unit
on New Bond Street, whilst Celine, owned by LMVH, and leading
fashion designer Oscar de la Renta, have recently agreed deals to
open on Mount Street.
There has been interest in the Quarter from more aspirational
premium brands that wish to trade alongside the luxury brands.
Chinese apparel retailer Bosideng recently opened on South Molton
Street and US chain Victoria Secrets has opened a UK flagship on
New Bond Street.

In total, more than two thirds of the worlds Top 100 Luxury Brands,
as defined by Jones Lang LaSalle, are located within the boundaries
of the London Luxury Quarter. This figure reflects a 42% increase on
2005, showing the growth in the sector and the attractiveness of the
Quarter to global luxury brands. The strength of trade in the area has
resulted in some luxury brands now being multi-sited. Jimmy Choo,
Cartier, Burberry, Ralph Lauren and Vivienne Westwood are just a few
notable retailers that have representation from more than one store.
The powerhouse luxury brands dominate much of the Quarter,
particularly in the traditional core. However, the growth of the area
has not only been driven by the big luxury houses, but also by
demand from smaller luxury brands looking for space alongside
the well-known premium brands. South Molton Streets proximity to
the core has recently attracted French boutique chains Maje and
Aubade, whilst Orelar Brown, a tailored mens beach and swimwear
boutique has opened on Vigo Street, hoping to take advantage of its
location adjacent to Savile Row. In addition, British designer Alice
Temperley has recently agreed terms to open a store on Bruton
Street alongside her UK fashion counterparts Stella McCartney
and Matthew Williamson. Hay Hill and Grafton Street have also
attracted the attention of the acquisitive smaller luxury brands. High
end fashion brand Vanessa Bruno and luxury interior designer Anna
Casa have recently taken spots in these locations.

Attracting new, niche and specialist

The opening of Dover Street Market in 2004 was also significant as it
provided new and upcoming discovery brands with the opportunity
to trade under the same roof as more established brands. It has
become an important destination in its own right for shoppers looking
for a new and unique shopping experience.
The Quarter is also home to over 60% of all jewellery retailers
found in Londons West End. Research from the New West End
Company claims this is one of the largest concentrations of jewellery
in the world given the mix of brands and collections on offer. World
renowned jewellers such as Bulgari, Cartier, Graff, Harry Winston,
Tiffanys and Piaget all have flagship stores in the Quarter, whilst
more specialist jewellers have presence in some of the Quarters
historic arcades. In total, over 90,000 ft of space is dedicated to
the sector.
London Luxury Quarter | 07

KEY NEW LUXURY

ENTRANTS TO THE
QUARTER IN 2012:
Alice Temperley
Annoushka
Belstaff
Celine
Fendi
Isabel Marant
Oscar de la Renta

Beyond Retail and the development

of the social scene
What differentiates the London Luxury Quarter
from any other global luxury destination in the
world is the depth and choice of offer, which
extends beyond traditional retailing. The key
components of the Quarter that are beyond retail
can be summarised as follows:

Business: Leading Office

Accommodation
Set
 within a leading business district, the
Quarter contains over 715,000 ft of boutique
office space, which accommodates global
institutions and niche financial expertise (Hedge
Funds, Private Offices).
The
 prestigious location, surroundings and
ancillary cultural and leisure facilities make it a
sought after location for financial expertise, in
particular for high net worth individuals.
Its
 proximity to key clients and leisure amenities,
and associated benefits to brand image, only add
to its attractiveness as a location.

Living: High End Residential

Proximity

to commerce, retail, restaurants, clubs,
theatres, heritage and culture attracts a global
appetite for living in the Quarter, which is home to
some of Londons most sought after addresses.
Prime

residential values have remained resilient
throughout recent years, buoyed by demand from
international investors, and values in the Quarter
are some of the highest in Central London.
Demand

continues - there are six new
residential developments within the boundaries
of the Quarter that have been granted planning
permission. They include the Grafton Street /
Bruton Lane development which will comprise
of 11 self-contained private flats and the
redevelopment of 27 Albermale Street by
Bremantel International which plans six
new apartments.

Culture: The Arts

The
 Quarter is home to the world renowned
Royal Academy of Arts. In early 2012, the
David Hockney exhibition was held there and
08 | Jones Lang LaSalle

generated a buzz in the art world that provoked

interest in the art galleries in the nearby vicinity
of the Quarter.
Berkeley Square hosts a variety of cultural
events including PAD - Londons leading fair for
20th Century art and design. The event offers
visitors a place to discover and purchase iconic
works from prominent international galleries.
In total there are 89 art galleries and dealers
within the boundary which together occupy over
160,000 ft of space. They include the Halcyon
Gallery, one of Europes leading contemporary
art galleries, and the Fine Art Society, which
specialises in British 19th and 20th Century art
and design.

Tourism: Globally Recognised

Leading Hotels
The
 Quarter boasts a number of luxury hotels,
six of which are internationally renowned
five star venues: Browns, The Connaught,
Claridges, The Ritz London, The Langham and
The Westbury

Dining: World Renowned

Restaurants
The
 number of restaurants located in the Quarter
has risen in recent years. At present there are 59
open across 155,000 ft of space this reflects a
17% rise in floorspace since 2005.
Recent entrants include Hakkasan on Bruton
Street, which has already been awarded a
Michelin star, Aubaine on Dover Street, Novikov
on Berkeley Street and Aurelia on Cork Street.
There

are a total of 14 Michelin stars in the area
with Hibiscus, The Square and Helen Darroze at
the Connaught each holding two. Other prestigious
restaurants include The Wolseley and Nobu.

Leisure: Exclusive Private Member

Clubs and Casinos
A
 growing number of exclusive new era private
member clubs, easily accessible to the high
net worth clientele who visit, live and/or work in
the area, are present within the Quarter. These
include, but not limited to: Annabels, Dunhill,
Mortons, Marks Club and George.

 T
 he Arts Club on Dover Street, originally founded in 1863,
underwent a complete renovation in 2011. It was totally
transformed into a truly world class establishment for those
involved in art, literature or science to meet, exchange ideas,
entertain and relax.
T
 he Ritz Club, featuring an exclusive casino and private gaming room,
sits within The Ritz London hotel, attracting high net worth gamers.

Other: Various

A
 uction Houses the Quarter is home to Sothebys, Bohams and
Christies, three of the most distinguished leaders in the auction world.
M
 otoring a number of luxury car brand showrooms are located
within the confines of the Quarter, from Bentley, Bugatti and Rolls
Royce to Jaguar and Porsche.
Y
 achting Grafton Street is home to Camper & Nicholson,
the global leader in all luxury yachting activities. Princess and
Sunseeker also provide yachting services within the Quarter.
S
 port British gun-maker Holland and Holland trades on Bruton
Street, selling bespoke sporting rifles and shotguns and Berretta,
one of the oldest firearms manufacturers in the world, is located
on St Jamess Street. Purdys and William & Son are close by in
Mount Street.

Specialist and last but not least, the Quarter is home to a

variety of small independent retailers that are specialists in
their respective fields. There are a number of renowned wine
merchants, including Jeroboams on Davies Street, Berry Brothers
on St Jamess and the Hedonism Wines on Davies Street, in
addition to specialist butchers (Allens of Mayfair on Mount Street),
cheese-mongers (Paxton and Whitfield on Jermyn Street),
barbers, perfumers and chemists trading in the Quarter.
This diverse offer beyond core retail is key to attracting people
to the Quarter. The complementary mix of retail, leisure, services
and tourism has positive spin-off effects for all. The ability to shop,
work, live and socialise in the Quarter contributes to it being a truly
sustainable and unique location.

Who shops in the LLQ

Local, European and Global shopper appeal
The location of the London Luxury Quarter results in a very diverse
consumer base.
The resident and local catchment population is dominated by affluent
demographic groups. According to the CACI Acorn classification,
prosperous and well educated residents are on the Quarters doorstep
in abundance. Perhaps unsurprisingly, within 1km of Bond Street, 86%
of residents are from the most affluent urban groups in the country.

London Luxury Quarter | 09

In addition to the affluent local resident population, London and the Quarter has significant international appeal, which in recent years has
been boosted by the depreciation of Sterling. Map 3 shows where the year-on-year growth in international spend (outside of Europe) is
coming from, and ranks each market in terms of contribution to total UK sales.

Map 3 - % change in year-on-year International average spend in the UK and

ranking by total contribution to sales

11%
2

Hong
Kong

13%
8

US
Thailand

Middle
East
9%
1

India

-2%
10

18%
5

9%

1%
3

China
Russia
Fed

Brazil

7%
4

Malaysia
16%
7

Nigeria

-1%
9

The number one international

consumer group, outside of
the Eurozone, is the Middle
East. In total it accounts for
26% of total international sales.
However, the most significant
growth has been from the Far
East. Average spend from
Thailand has surged 18% yearon-year, and from Malaysia it
has increased 16%. China, the
second largest non-European
shopper group, saw 11% year
on-on-year growth over the
same period.

% change year-on-year
Jan-Jul 2011-12
Ranking (sales)

Source: Global Blue, July 2012

Map 4 Origin of International Sales to London and the Quarter

Bond Street
China 28%
Russia Fed 8%

West End
China 16%
Kuwait 7%
Russia Fed 8%

Mayfair
Russia Fed 8%
US 9%

Jermyn St

US 16%
Nigeria 15%
Russia Fed 10%

Source: Global Blue, May 2012

10 | Jones Lang LaSalle

Drilling down a level, map 4

highlights where international
sales specific to Londons West
End and locations across the
Quarter are coming from.
China is still the largest
international consumer group in
both the West End and on Bond
Street, accounting for 16%
and 28% of sales respectively.
However, consumers from
Russia are significant across
all locations, contributing
the highest proportion
of international sales to
retailers in Mayfair. Jermyn
Street generates 16% of its
international sales from the US.

The global appeal of London is soaring, particularly in the Far East. Map 5 ranks the top three markets that are fuelling the growth in
international sales across the same geography.

Map 5 Top 3 international markets fuelling growth across London and the
Quarter (year-on-year)
Bond Street

1. Qatar - 79%
2. Indonesia - 65%
3. Japan - 58%

West End

1. Qatar - 78%
2. China - 50%
3. Malaysia - 35%

In Mayfair, sales from Indonesia

and Qatar more than doubled
in the period between January
and May 2012 compared to
the previous year. Bond Street
has also benefited from these
visitors, with sales from Qatar
up 79% and Indonesia up 65%.

Mayfair

1. Indonesia - 148%
2. Qatar - 102%
3. UAE - 99%

Jermyn St

1. China - 108%
2. Pakistan - 74%
3. India - 20%

Source: Global Blue, May 2012

Economic growth in China is still a key driver of international sales in the West End, up 50% May 2012
on last year. The boom in Far Eastern sales in Jermyn Street shows that international shoppers are
willing to shop outside the traditional retail core and explore new areas. This is positive news for the
Quarter and its future growth prospects, especially when considering Grosvenors development plans in
north Mayfair and The Crown Estates plans for investing in St Jamess.

London Luxury Quarter | 11

Increasing need for service

While the luxury sector has proved itself adept at nurturing customers,
despite the continuing global uncertainty over economies and the
growth of on-line shopping, there remain real challenges. Retailers
continually need to offer something more.
Luxury retailers have historically benefited from shoppers wanting to
touch and feel a product before they spend their hard-earned cash.
However, with the rise and success of websites such as net--porter,
which is dedicated to the luxury shopper, retailers need to consider
what more they can do use of mobile technology for instance
to drive footfall and provide information to potential customers.
They need to focus even more on service and the in-store
experience to become entertainers, comperes, theatre producers,
masters of ceremonies, butlers, concierges, pamperers, flatterers,
psychologists, social workers and more, in order to compete.
The diverse consumer base that the Quarter attracts adds another
dimension for retailers to consider. From the discreet European shopper,
to the more conspicuous Far Eastern consumers, retailers need to
tailor their services to the varying cultural demands. A chauffeur driven
service to the store entrance may be a luxurious service for the more
ostentatious shopper, but a back door entrance with private dressing
area may be favoured by other more private individuals.
In a bid to provide an unrivalled service, retailers in the Quarter
need to adapt to and keep up with the changing and sometimes
challenging demands and needs of its shoppers. Not only do
consumers want an experience, but they also want to know
everything about a product before they buy. As such, specialist
knowledge is key. Competition for the best employees is intense,
with retailers wanting only the top employees with expert product
knowledge and language skills.
There is already evidence of retailers in the Quarter adapting to
this changing retail environment. The new Chanel store, due to
open in the Quarter later this year, will feature a private VIP area
on its second floor. This follows in the footsteps of the Louis Vuitton
store which incorporated this service into its 2010 redevelopment.
Graff, Cartier and many of the high end jewellers frequently provide
parking outside their stores to meet the needs of their clientele, who
like to arrive safely in chauffeur driven cars. Stella McCartney on
Bruton Street has a back entrance that offers its customers privacy
from the general public. Likewise, the new Temperley store set to
open on the same street will have discreet rear access.

12 | Jones Lang LaSalle

Retail investment
and development in
the Quarter
Retail investment goes from strength to strength
The London Luxury Quarter is an attractive market for investors thanks to constrained supply,
sustained demand and the rise in rents and values over recent years. As such, retail investment
activity has been on a general upward trend over the last 10 years.
Fig 1 Total Value of Retail Transactions in the
Quarter from 2002 - 2011
12

700,000,000

600,000,000

10

No. of Transactions

400,000,000
6
300,000,000
4

200,000,000

Total Value $

500,000,000

100,000,000

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Source: Real Capital Analytics, June 2012

Table 1 Top Investment Deal in the Quarter

2002 2011
Year

Address

Price in $ (000)

Purchaser

2002

25 Old Bond Street

43,000

Tiffany & Co

2003

39-42 New Bond Street

54,300

David Daly

2004

Burlington Arcade

128,300

Bermudan Trust Fund

2005

167 New Bond St

75,160

Quinlan Private

2006

105-106 New Bond St

47,500

Winrunner Ltd

2007

15 Berkeley St

63,600

Invista Real
Estate Investment
Management

2008

17-20 New Bond St

119,200

David Daly

2009

167 New Bond St

114,000

Hermes

2010

6-8 Old Bond Street

107,000

Giuseppe DeLonghi

2011

17-20 New Bond St

255,300

LVMH

In total, $2.9 bn worth of deals was transacted in the Quarter

between 2002 and 2011. 2011 saw a significant increase in the total
value of retail investment transactions, up almost 50% on 2010 to
just shy of $650 mn. The sale of 17-20 New Bond Street for over
$255 mn to LVMH (the largest deal of the last 10 years in terms of
total value) significantly boosted this figure.
The increasing value of property in the Quarter is clear. In 2011 there
was just one more transaction recorded than 2002; however the total
value of deals transacted was more than three times as much.
As table 1 demonstrates, with the exception of 2007, when a deal
on Berkeley Street topped the table, the most expensive investment
deal in each year over the last decade was for properties located
on Bond Street. This highlights the streets continued appeal
to investors looking for secure assets that offer a safe haven
against the global economic uncertainty. However, with continued
investment, and the Quarters boundaries extending beyond the core
of Bond Street, investors are beginning to look for assets located on
the neighbouring streets.

Source: Real Capital Analytics, June 2012

London Luxury Quarter | 13

Looking at the Quarter as a whole, map 6 details and ranks the top investment deal by street in terms of $/ft from the last five years.

Map 6 Top Investment deals by street 2007-2011

6 South Molton St
$6,128/ft2 (2012)

6 Maddox St

$2,787/ft2 (2007)

1 New Bond St

= 7 Avery Row

$12,765/ft2 (2011)

$1,792/ft2 (2012)

2 Old Bond St

$9,780/ft2 (2007)

8 Berkeley St

$1,584/ft2 (2007)

9 Dover St

5 Burlington Arcade

$1,071/ft (2011)
2

$3,471/ft2 (2004)

= 7 Albemarle St

$1,762/ft2 (2012)

3 St Jamess St

$8,185/ft2 (2011)

Source: Real Capital Analytics, June 2012

Unsurprisingly, New Bond Street and Old Bond Street lead the
way with deals in excess of $12,000/ft and $9,000/ft respectively
over the period. However the rise of St Jamess Street in the south
and South Molton Street in the north of the Quarter is evident.
Recent deals place them in 3rd and 4th position. 11-12 James
Street set Capital & Counties back over $8,000/ft in 2011, and 28
South Molton Street was sold for over $6,000/ft earlier this year,
which reflects the growing interest in these more peripheral streets
amongst investors.

The Rise and Rise of Owner Occupiers and High

Net Worth Purchasers
Recent years have witnessed a trend towards owner-occupier
investment in the Quarter, who together with high net worth
investors, have fuelled investment activity in the area. In 2011, 80%
of retail deals transacted were bought by one or the other. Significant
deals include the sale of 17-20 New Bond Street, home of Louis
Vuitton, to its owner LVMH, and the purchase of the Cartier store at
40/41 Old Bond Street by an Irish ultra-high net worth individual.

14 | Jones Lang LaSalle

The trend towards owner-occupation is set to continue. Jones Lang

LaSalle predicts that by 2020, around 20% of Bond Street will be
in the hands of the actual occupiers. The Global Luxury Houses
are driving this trend and seek to take advantage of the control
and security that owning your own property offers. As the Quarter,
particularly Bond Street, is a notoriously difficult market to enter
given the long lease lengths and high rents, purchasing the asset
enables retailers to maintain power and a presence in the Quarter.
With appropriate investment from owner-occupiers, landed estates
and local authorities, the Quarter has the ability to be holistically
managed to drive improvements. Freehold retailers becoming
stakeholders in the Quarters future, and therefore taking a longer
term view, will recognise the added value of inward investment
in the public realm, to create safe and attractive places. This has
historically been very difficult to do given the fragmented ownership
of the Quarter, particularly on Bond Street, and the lack of interest
from the non-retailer landlords to contribute to a central pot. This
continued inward investment from all stakeholders is key to ensuring
that the public realm lives up its occupiers increasing demand to
trade in desirable locations.

Map 7 Major developments across the Quarter

Major Retail Developments
The retail property market in London has enjoyed
a period of strong growth, driven by retailers
competing for space. However, the demand and
supply imbalance means that future development
is essential to sustain growth and provide new
retailers with the opportunity to enter the market.
At present there are 12 key developments, either
under construction or in the pipeline, that are
shaping the future of the Quarter.
Demand for space from powerhouse brands is
driving development in the Quarter. British brand
Belstaff will anchor a new development at 135-137
New Bond Street, and iconic luxury retailer Burberry
has recently opened its largest flagship store on the
periphery of the Quarter. Chanel will open a second
store on Old Bond Street later this year.

Source: Jones Lang LaSalle, July 2012

Table 2 Details of Major Developments in the Quarter

Map
Address
Number

Size
(ft)

Details

Stage

28 South Molton Street

14,000

Retail & Office

Development - Bosideng

Opened August 2012

101 New Bond Street

50,000

Office Development

Pre-planning

111-115 New Bond

Street

16,500

Retail Development Victorias Secret

Opened September 2012

135-137 New Bond

Street

25,000

Retail Development Belstaff

Under construction

8-10 Grafton Street

60,500

4,500 ft retail &

56,000 ft office space

Pre-planning

49 51 Conduit Street
& 24 Savile Row

31,500

9,000 ft retail &

22,500 ft office space

Due summer 2013

Crossrail, 64 72
Bond Street

291,000

44,000 ft retail &

247,000 ft office space

Construction strart 2015

34 36 Bruton Street

20,000

7,500 ft retail &

12,500 ft office space

Construction strart 2013

158 159 New Bond

Street

40,000

Retail Development
Chanel

Due December 2012

10

Burlington Arcade

37,500

Retail Development

Pre-application

11

St James Gateway

100,000

23,000 ft retail,
57,000 ft office &
18,000 ft residential

Due 2013

12

121 Regent Street

20,000

Retail Development Burberry

Opened September 2012

The Crossrail development at 111-115 New Bond

Street is the largest development in the pipeline.
At just short of 300,000 ft, the majority of the
development will be dedicated to office space, but
it will feature 44,000 ft of retail space.
In addition, The Crown Estates development of
St Jamess Gateway, set to complete next year,
will add 23,000 ft of retail space and create a new
and vibrant mixed-use district in the south of the
Quarter that will attract shoppers, workers and
residents alike.

Public Realm Improvements

If landlords want to attract the top occupiers and
customers globally, then it is essential that they
too adapt to the changing retailing environment,
and keep up with increased demands. This is
particularly true in the Quarter, as shoppers
expect a shopping environment that matches the
luxury retail offer. Major landlords Grosvenor and
The Crown Estate, which own Mount Street and
St Jamess respectively, have taken advantage
of their block ownership and are co-ordinating
projects that aim to create places that offer more
than just retail.

London Luxury Quarter | 15

Case study
Grosvenor - Mount Street Public
Realm Improvements
Aim
To create a distinctive and vibrant destination for
high quality shopping that attracts not only domestic
but international high end shoppers and brands to
Mount Street.
improving the street furniture benches/bins etc.
better street lighting
clear pavements, greenery
enhancing the existing architecture
improving linkages with other streets

16 | Jones Lang LaSalle

Opportunities and
challenges
London A Leading Global City

Beyond Retail & Place Making

London will continue to be challenged by other global cities. To

support future growth of the Quarter, it must maintain its leading
position and continue to attract visitors, occupiers and investors
alike. Its unique DNA should be nurtured, as the strength of this
places it ahead of its competitors and is what will drive future growth.

As mentioned, the depth and choice in the Quarter is what

differentiates it from any other luxury retail destination across
the world. Not only does it showcase an unrivalled mix of retail
brands, but also an offer that extends beyond the realms of what is
considered traditional retail. It is this variety that makes it a unique
location and allows for place-making.

Retail
The strength of the Quarter as a luxury shopping destination has
been underpinned by the diverse mix of brands. From the start-ups
to the established, it is a sought after location for luxury retailers
across the world. British-born brands have historically provided the
backbone to the Quarter, and have played a crucial role in shaping
its success to date.
With the increasing influence of the global luxury powerhouses, it is
vital that the Quarter continues to provide opportunities for the new
and emerging brands in order to maintain the vibrant and unique
character that has shaped its evolution. In a location steeped with
British heritage, it is also essential that support is given to domestic
brands so that the unique charm of the area is not diluted by the
arrival of international brands.

The challenge facing the development of the beyond retail offer

across the Quarter comes back to ownership. Landlords can
generally generate higher rents from a luxury retailer compared
to a restaurant or art gallery occupier, for example, and therefore
individual landlords will always strive to get the best deal possible.
In locations where there is block ownership, such as Mount Street,
St Jamess and Burlington Arcade, the ability to grow the beyond
retail offer is far easier as the landlord will directly reap the longterm benefits of place-making through a diversified offer. Holistic
management of the Quarter is required to ensure the vibrancy and
vitality is preserved, be that through landlords working together or
through local authority influence.

A number of major retail destinations across the country now have

extended opening hours; in some locations retailers trade until 10pm
on a daily basis. Across Londons West End, this is particularly true,
however in the Quarter the majority of retailers still only trade between
the traditional trading hours of 10am-6pm. This is fast becoming
a contentious issue. In a retail market where shoppers demand
convenience, there are concerns that the limited shopping hours could
have a detrimental effect on trade as consumers choose to shop in
other more convenient ways, be it online or in other retail locations.

London Luxury Quarter | 17

Development
The Quarter is still uncharted territory for a number of top luxury
retailers. French fashion house Chloe, and Italian fashion
designers Valentino and Roberto Cavalli, are key omissions,
as is American born style icon Tom Ford. However, the lack of
appropriate stock together with the dominance of the luxury houses
has made it difficult for new retailers to open in the traditional core
of the Quarter.
As such, many retailers are pursuing opportunities in the
surrounding streets. Mount Street, for example, an area traditionally
dominated by antiques shops and galleries, has transformed into a
key luxury destination with the arrival of brands including Christian
Louboutin, Loewe and Nicholas Kirkwood. As a result, small hubs of
luxury fashion have emerged, fuelling the growth of the Quarter.
With the forecast growth of the Global Luxury Market and the
increasing attractiveness of London, demand for space in the
Quarter is intensifying. As such, the recent trend for retailers to
locate in new contiguous areas of the Quarter will continue, and
could potentially see growth beyond the boundaries of its definition
today. As small fashionable areas such as Boxpark in Shoreditch
emerge across the Capital, it is essential that the Quarter remains
competitive. Therefore, redevelopment of appropriate stock must
continue so that opportunities for new entrants exist.
Looking beyond the current boundaries of the Quarter, it is possible
to spot future growth potential. The planned redevelopment of
Grosvenor Square is likely to fuel improvements in the area to the
north east of the Quarter. The relocation of the US Embassy to
Battersea will make way for a new development that will kick-start
regeneration and could lead to an extension of the Quarters current
boundary in the future.

18 | Jones Lang LaSalle

London Luxury Quarter | 19

Travel & Connectivity

Londons excellent connectivity with the rest of the world
will remain key to its success going forward. Its proximity to
international transport hubs, including three major airports
(Heathrow, Gatwick and Stansted) and the Eurostar, add to
its global appeal.
In terms of passenger numbers, Heathrow is the busiest
airport in the world. In order to meet future demand and to
maintain the Capitals future attraction, there are plans in
the pipeline to build an additional runway at the airport to
increase capacity.
On a more localised scale, the completion of Crossrail in
2018 will improve connectivity domestically across London.
With its planned route through Bond Street station, the
Quarter is likely to directly benefit from this major transport

20 | Jones Lang LaSalle

development. Predictions from Crossrail estimate that

the number of people using the station on a daily basis
will increase by over 45% from 155,000 to 255,000. This
increase in footfall has the potential to drive significant
sales growth in the Quarter.

Heritage & Culture

Although difficult to quantify, Londons heritage and culture
has been fundamental to the citys development to date.
The attraction of the Capital as a place to invest, work
and live in has been boosted by its multi-cultural vibrancy,
lifestyle and unique character.
London has taken centre stage across the world by hosting
the 2012 Olympics. This event has showcased its great
diversity to the world and will leave a lasting legacy that will
help shape the citys future development.

In conclusion
The London Luxury Quarter can deliver. Set within a
unique, historic and culturally diverse backdrop, it is
a destination with international appeal. Not only does
it showcase some of the top global brands, but its
assorted mix of retail, office, residential and leisure
space sets it apart from any other luxury destination in
the world. With projected growth of the global luxury
market, there are significant opportunities for the Quarter
to grow and extend beyond its current boundary. By
building on its existing proposition, it will continue to
attract occupiers, investors and shoppers alike.

London Luxury Quarter | 21

Contacts
Jones Lang LaSalle

New West End Company

Guy Grainger
Head of UK Retail
Tel: +44 (0)207 318 7824
Email: guy.grainger@eu.jll.com

Jace Tyrrell
Director of Communications
Tel: +44 (0)20 7462 0680
Email: jace.tyrrell@newwestend.com

Martin Thomas
Director Central London Retail
Tel: +44 (0)207 318 7802
Email: martin.thomas@eu.jll.com

Heart of London Business Alliance

James Brown
Head of EMEA Retail Research
and Consulting
Tel: +44 (0)203 147 1155
Email: james.brown@eu.jll.com

Karen Baines
Head of Marketing & Communications
Tel: +44 (0)20 7839 3409
Email: karen.baines@heartoflondonbid.co.uk

Jennie Beattie
Senior Retail Research Analyst
Tel: +44 (0)207 087 5523
Email: jennie.beattie@eu.jll.com

Copyright Jones Lang Lasalle IP, Inc. 2012.

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