Tenants in Piccadilly’s historic Burlington Arcade fear they may be forced out by massive rent rises. The concerns emerged after the owner revealed that an un-named perfume retailer is close to signing a lease agreement at six times the current rate.
The existing occupier, who is due to vacate the unit shortly, currently pays £160 per sq ft for the ‘Zone A’ space. If the deal is concluded the new tenant will be paying a whopping £973 per sq ft.
Now traders are worried that American investor Joe Sitt, who purchased the property in 2010 through his Thor Equities fund, is seeking to replace the majority of UK occupiers with international brands willing to pay much higher rents.
Burlington Arcade opened in 1819 and is considered the first example of the covered shopping arcades that became fashionable in the nineteenth century. In this sense, it can also be seen as a precursor of the modern shopping centre.
It was the brainchild of Lord George Cavendish, who lived in nearby Burlington House – now the Royal Academy – and was designed “for the gratification of the public and to give employment to industrious females.”
During its long history Burlington Arcade has welcomed many celebrity shoppers including Fred Astaire and Ingrid Bergman. It has also endured misfortune.
In 1936 a fire broke out leading to widespread panic and looting. Shortly afterwards the arcade suffered considerable damage when it was struck by a Second World War bomb. The restoration was completed in the 1950s.
The tenant leaving the arcade has traded on the premises for half a century but insists the departure is not related to the rising rents.
“The landlords are decent people who are here to make a profit,” cashmere retailer John Berk told the Evening Standard. “It’s understandable why rent is increased.”
But others spoke of the increasing struggle small retailers face in the arcade. “It’s the same situation as when a large Tesco invades a small town,” said jeweller Robert Ogden. “It takes over but the people in the town can’t do anything about it.”
Burlington Arcade generated around £4.3 million a year in rents when Mr Sitt’s company bought the property for £104 million. Subsequently, due in part to successful management, the value has risen.
“No other property in the UK or Europe has increased in value so much,” Sitt said. “It shows the strength of the UK market.”
