LONDON (Reuters) - Shoreditch is set to be home to a “mini Bond Street” as luxury fashion houses Christian Louboutin, Ralph Lauren and Vivienne Westwood home in on London’s east end, setting the stage for a possible doubling of rents over five years.
The three fashion houses, which have sites in high-end areas of London’s traditional West End shopping district, are among luxury retailers targeting the once down-at-heel Shoreditch to capitalise on its edgy image, lower rents and increasingly affluent population, sources said.
“It is a bit like the Meatpacking District of New York,” John Lovell, a Shoreditch landlord of five properties, told Reuters, referring to the Manhattan neighbourhood transformed by an influx of high-end boutiques and restaurants in the 1990s.
Shoreditch, best known for gloomy-looking industrial buildings and high crime rates, borders the City of London financial district. Its Old Street roundabout, where Google (GOOG.O) leased an office last month, has been targeted by the government for the development of a “Silicon Valley” style media hub .
Independent fashion labels, art galleries and niche bars have appeared in recent years to serve media, fashion and financial workers in the district.
Developer Hammerson (HMSO.L) is planning a 485 million pound project south of Shoreditch High Street with about 630,000 square feet of offices and shops as well as 299 homes. Derwent London (DLN.L), which owns 685,000 square feet of property in the Shoreditch and Old Street areas, wants more.
Paris-based designer Christian Louboutin, whose red-soled shoes sell for more than $1,000 per pair, is weeks from closing a deal for a store close to the Boundary Hotel on the most sought-after area of Redchurch Street — which already houses a handful of high-end brands, two sources told Reuters on condition of anonymity.
British designer Vivienne Westwood, famous for her role in shaping the punk movement in the 1970s, is looking for a 2,000 square foot shop, while American retailer Ralph Lauren (RL.N) has been scouting for a 4,000 sq ft unit for its second RRL-branded store in Britain, another source said.
Prada (1913.HK) is also looking for sites in Shoreditch, three property agents told Reuters.
Fine-dining Japanese restaurant Zuma is hunting a site to add to its other London eatery near Harrods, two sources said.
Unlike many mid-market British retailers, luxury brands have bounced back strongly from the 2008 downturn on the back of strong demand from emerging markets, allowing them to finance expansion plans and experiment with retailing concepts.
The spike in interest in Shoreditch comes as competition for stores on London’s traditional hot spots — Bond Street, Regent Street and Oxford Street — has become fiercer and more costly, forcing retailers to look elsewhere.
Several high-end clothing brands from China and Japan are looking to launch debut British stores in Shoreditch to capitalise on lower rents and its image, one source close to the situation told Reuters.
Rents in Bishops Square, south of Shoreditch High Street, have risen to 135 pounds per square foot from 65-70 pounds since it was redeveloped in 2005.
Rents on Redchurch Street have the potential to do the same over the next five years, said Rob Fay, Colliers International head of central London retail agency.
Retail property values in some areas have more than doubled in 10 years to over 500 pounds per square foot, said Michael Newell, a property agent at local firm Dominion.
Even after doubling, rents would be far below those on New Bond Street and Oxford Street, which peak at 964 pounds and 715 pounds respectively, according to data from property consultancy Cushman & Wakefield.
The bulk of Shoreditch properties are owned by families or wealthy individuals mainly from Britain, compared with Bond Street and Oxford Street which are mostly foreign-owned.
Lovell, reconfiguring one of his properties to make it more suitable for retail, said others were doing the same.
The fragmented ownership means it may be more difficult for bigger developers to capitalise on any boom.
“We would love to find more opportunities there, but we do not, as a company, buy very small-scale sites,” said Simon Silver, head of regeneration at Derwent.