Wednesday, March 13, 2013
Hard working, hard pressed landowners
Rents rocket in Soho, new hotspot for chefs
Property rents are rocketing in Soho as top chefs and restaurant chains battle for prime spots. Kurt Zdesar, the man behind successful dim sum restaurant Ping Pong, has recently paid more than £1 million to open an outlet in Frith Street and other sites are subject to bidding wars. Experts say business is out-stripping levels from the last boom a decade ago with the completion of Crossrail instrumental in attracting investment.
Posted by mark wadsworth @ 03:39 PM (2330 views)
3 thoughts on “Hard working, hard pressed landowners”
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drewster says:
Let’s work out the land value of Soho by comparing commercial property rents there with rents in (say) Doncaster.
In Soho, you’d pay £45,000 pa for a 530 sq ft A3 restaurant => £84.90 / sq ft
In Southport, you’d pay £4,784 pa for a 522 sq ft A3 restaurant => £9.16 / sq ft
So we can see that the difference in land value is some £75 per square foot per year. That’s only the ground floor; in central London you’ll get another £50 a year per sq ft for each floor of office space above.
Fortunately we already have Business Rates which are worth about 50% of the rental value (so they capture 1/3rd of the total value). This leaves the other two thirds on the table for landlords to collect. I’ll leave you to draw your own conclusions.
drewster says:
(typo: Doncaster => Southport)
mark wadsworth says:
D, good work. The overall difference between the highest and lowest rental values in the UK are about ten million to one, forests or grouse moor in Scotland are £5 per acre per year; best bits of London (plenty of places ore expensive than Soho) are £200 per square foot per year.
£200 x 9 x 4840 = £8,712,000.
even if you ignore agricultural, the difference is about a thousand to one between best and cheapest urban/developed land.