Luxury brands are flocking to Shoreditch. Is it too late to ride the area’s wave of property investment?
The Tea Building straddles the corner of Bethnal Green Road and Shoreditch High Street. It’s a giant warehouse space welcoming visitors to Shoreditch with its massive stencilled TEA sign, the East End’s version of the Hollywood sign. It lets everyone know they’ve arrived in the hippest part of town.
The building is home to private members club Shoreditch House, the offices of trendy ad agency Mother and billionaire Richard Caring’s attitude-laden restaurant Pizza East.
There’s Hoxton Square, home to painfully trendy bars such as the Electricity Showrooms. Round the corner is the White Cube gallery, stuffed with art by Damien Hirst, Tracy Emin and other Young British Artists.
Even the haircuts tell you where you are (though the Hoxton fin is mercifully disappearing).
But what property investors want to know is whether the Shoreditch commercial and residential values can continue to climb.
Shoreditch: “mini Bond Street”
As we reported last week, a number of luxury brands have expressed interest in a move to Shoreditch. The area is being eyed up by the likes of Christian Louboutin, Vivienne Westwood (whose son Joe Corre already has a concept store on Great Eastern Street called A Child Of The Jago), and Ralph Lauren.
The creation of an East End “mini Bond Street” would see rents rise sharply, according to Colliers International. Despite what would seem like the end of Shoreditch’s investment window property, experts are adamant that E1 is still an enticing piece of property paradise.
“Shoreditch is still a damn sight cheaper than other popular parts of London,” says Andrew Phillips, sales manager at Foxton’s Shoreditch office. “To buy a residential property you’re looking at around £700 – 800 pounds per square foot. As you move west towards Clerkenwell and into Central London it’s well over £1,000.”
The Tea building in the ‘Ditch epitomises the area’s gentrification better than any other building. From dilapidated warehouse used to process and package tea, to an uber-cool media hub drenched in creative enterprise and culture, it is a story that has been repeated all over the E1 postcode for the past fifteen years.
“We’ve been very involved with the Tea building,one of the largest and most prominant in the area, for the landlords Derwent London” explains Anthony Lorenz, founder and chief executive of The Lorenz Consultancy. “The rental value of the unfitted top floor in October 2010 and the rent was £21.50 per sq ft per annum, only a year later rents have now been agreed at £29 per square feet.”
Michael Newell, a property agent at local firm Dominion, said that the past decade has seen retail property values more than double since 2001. But even with rents rising remarkably quickly, Lorenz is quick to note that it is still cheaper than other parts of town: “Even in the best buildings in the area the office rents are only £30 per square foot, it’s almost £100 per sq ft in Mayfair.”
Despite the huge influx of media types, big brands and housing developers colonising Shoreditch’s industrial warehouses, there are still renovation opportunities to be had for those with a keen eye for investment.
“There is still a lot of scope for redevelopment in the area,” says Phillips. “If you look at Redchurch Street there are a number of disused buildings crying out to be used. I still drive around thinking ‘Cor, that would be a great building to use!’ ”
With rents rising so quickly, will we start to see Shoreditch’s small independent businesses – such a lure for the residential market – squeezed out of the area by the big boys?
Caravan is an independent lifestyle store once based on Redchurch Street (an area fast becoming the epicenter for redevelopment that leads down to Brick Lane). The shop recently moved further out towards Hackney Road. But according to owner Emily Chalmers, the move was not a financial decision.
“Rents have increased but that was not why we decided to leave Redchurch Street. I thought it was more interesting to move a bit further out.”
Phillips confirms this, insisting that smaller businesses are not being pushed out by the rents. “The small businesses have just been added to,” he argues. “There have been so many empty spaces here and these have been filled. Shops like the B.L.T Deli on Curtain Road have been here for years, and are still thriving.”
Is Shoreditch losing its edge?
Shoreditch’s transformation from an unloved splinter of industrial wasteland to what Lorenz describes as “a media village” took place long ago. London’s entrepreneurs began populating the dusty old warehouses in the mid-nineties creating what has been dubbed “Silicon Roundabout”. In addition to the burgeoning fashion and art scene in the area, the influx of young start-up companies helped to turn the area into a “destination”, filled with cafes, galleries and bars.
That said, the area is in a second phase of transformation – a shift towards the mainstream. Shoreditch is still the stomping ground for the beatnik art and fashion scene. But some have argued that the area has lost its outsider cool. And unfortunately for shops like B.L.T there are some notable, some might argue less desirable, additions to the crowd.
“We’ve seen some of the sandwich bar brands moving in,” says Phillips. “They are still on the peripheries of the area near to Spitalfields but we’ve certainly seen interest in the area from people that would never have considered it before.”
One of Shoreditch’s newest additions is the Aubin and Wills destination store on Redchurch Street. A collaboration between Shoreditch House and British artist and curator Stuart Semple, the new destination store launched on 20 May.
A multi-storey, converted post-war office building, the 7,500sq. ft concept space includes the Aubin Gallery and the Aubin Cinema and as such “fits” into the Shoreditch landscape but has caused some to question Shoreditch’s status.
“Of course the immediate question is what is an older version of Jack Wills doing in Shoreditch? Has the brand missed its mark in selecting a new home, or is this another sign of Shoreditch losing its edge?” asks local fashion blogger Chenay Nicole.
And does it need “edge” to be investable?
While some may fret about the polishing down of Shoreditch’s sharp edges, others may simply see it as a widening of the East End demographic.
“Prices here are still very competitive compared with West London and so we find a lot of West Londoners moving to the area,” says James Walker Osborn of Stirling Ackroyd.
“One of the best things about Shoreditch is
that now there is something for everyone. If you want to go to a grimy East End boozer, or a chic new bar, you can. You can still make a lot of money over time if you invest here, and you will certainly have a good time while you do it.”
Shoreditch may have started to become part of the mainstream, and the warehouse lofts are no longer going for the bargain basement prices of old. But if you move fast and hunt around for the perfect renovation opportunity, Shoreditch could still be your cup of tea.