Tenants fear being priced out by massive rent rise at Burlington Arcade in Mayfair

 
Traditional: Burlington Arcade was London’s first covered shopping centre

Fresh concerns were raised today that the American owner of Mayfair’s Burlington Arcade may soon price out its long-standing “antiques and watches” tenants.

New York property investor Joe Sitt told the Standard he is close to securing a six-fold increase in the rent on one of the units in the 195-year-old mall.

He said he is in talks with an upmarket perfume company about signing a deal at £973 per sq ft, setting a new benchmark for London’s first covered “shopping centre.”

The existing tenant of the shop unit is paying £160 for the “Zone A” space — the first 20-feet back from the window — but is due to leave soon. It will revive concerns that Mr Sitt, who bought the arcade in 2010, wants to replace its largely British occupants with major international labels that can afford the higher rents.

Mr Sitt, who runs the £3 billion property investment fund Thor Equities said: “No other property in the UK or Europe has increased in value so much. It shows the strength of the UK market.” The store moving out is believed to be cashmere retailer Berk, which has been in the arcade for half a century, but managing director John Berk said the departure was not to do with the rising rent.

He said: “The landlords are decent people who are here to make a profit, it’s understandable why rent is increased.”

But jeweller Robert Ogden said it was increasing struggle for smaller retailers to survive in the arcade, adding: “It’s the same situation as when a large Tesco invades a small town — it takes over but the people in the town can’t do anything about it.”

The US property conglomerate paid £104 million for the arcade triggering the first “Battle of Burlington” when tenants and celebrities such as Stephen Fry and Dame Judi Dench opposed plans for a £2.5 million makeover.

The scheme was largely rejected by Westminster council although some smaller scale changes were allowed.

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Mr Sitt claimed Prince Charles intervened on behalf of the tenants, writing letters supporting their cause to Westminster Council, planners and preservation bodies. “I was wondering why their was so much opposition, until I found out,” he said.

Some top brands such as Lulu Guinness and Theo Fennell have already moved in and camera maker Leica has a “pop-up” outlet. The 200-yard mall that runs between Piccadilly and Bond Street was generating £4.3 million a year in rents when Mr Sitt took over. If he can get the rent up to £10 million the arcade will be worth £200 million.

Burlington Arcade opened in March 1819 “for the sale of jewellery and fancy articles of fashionable demand, for the gratification of the public”.

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