London: De Beers Diamond Jewelers on Old Bond Street is considering leaving its flagship London store after almost 15 years, citing an increase in rent and business rates as motivating its decision to relocate, writes The Telegraph. A spokesperson for the company told The Telegraph increased costs related to its lease had led it to “explore alternative options on Bond Street” for its move. Government plans to overhaul the business rates system from April will hit central London retailers particularly hard, with the capital’s most popular shopping street experiencing an average increase in rates cost of 50 percent. Rhiannon Bury writes, “Rents in Old Bond Street have also been at record levels in recent months.
When De Beers agreed to move into the space in 2002, rents were around £400/sq ft ($500), but the retailer would have been likely to see a huge increase when its rent was reviewed. Neighbouring retailer Polo Ralph Lauren found its rents almost doubled to £2,225/sq ft ($2,778) when it agreed to stay in its shop on the street at the end of last year.”
The Business Rates Reform entailed that as of April 2016, 1.9m British properties were revalued based on 2015 rental values, rather than their 2008 values. The revaluation, which normally occurs every five years, was delayed to avoid disrupting the general election. As a result, the majority of British companies which have properties with a rateable value of more than £15,000 ($18,725) incurred soaring rates bills as rents have increased since the recession.
Some retailers in the capital incurred 400% increases stretching over the next 5 years, while rates will fall for many businesses outside London. In regional towns high street rents have slumped since the financial crisis. De Beers Jewellers last year relocated its New York flagship from its Fifth Avenue and 55th Street roots for a new flagship location on Madison Avenue. They are also planning to bring its “new store concept”, which it debuted in New York, to new premises in London, and is likely to seek a smaller store.