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“ LEISURE CONCEPTS INVOLVING TABLE TENNIS, DARTS AND EVEN AXE THROWING ARE NOT AVERSE TO GOING UNDERGROUND.”
by the proliferation of gyms and other health & wellness- orientated offers. This trend is particularly strong in London but is also being seen in other UK cities.
Much of the growth in the number of gyms can be attributed to the rapid increase in budget operators. Brands such as PureGym have exploded onto the London scene, with almost half of the clubs operating under this model having opened last year. For these operators with their no-frills offers, the prospect of basement space holds no terrors as long as it can be adequately air-conditioned and has a suitable head height.
Strong demand from the budget sector has driven rental values on recent lettings in Central London, and we’re seeing this filter across the market in rent reviews over the next few years delivering welcome growth to landlords. Surprisingly, despite their low cost model, our research into the sector earlier this year showed that in their ‘race for space’ new budget concepts have been typically paying 19% more for space than their mid-market counterparts.
However, another market trend – ‘competitive socialising’ – has meant that gym operators are not having an unrivalled choice of basement space. New leisure concepts like Bounce (table tennis), Flight Club (darts), Lucky Voice (karaoke) and Whistle Punks (axe throwing) are not averse to going underground, and the revenue intensity of their offers gives them some latitude on rents. And, of course, the rateable
value of basements is much less than ‘above ground’ and substantially reduces total occupier cost.
In addition, the fierce competition for space in the eating and drinking sector has paradoxically compelled some operators to look at basement accommodation. Many are actually suited to this setting. The London Cocktail Club, Wagamama and Hawksmoor are all receptive to underground opportunities while chop house, Blacklock has just opened its second restaurant under the Walkie Talkie building in the City of London – its first was in Soho basement space.
All of which is good news with landlords who have underground space to let, but the range of options does bring its own challenges. We have been working with a number of landlords in situations where basement space has the potential for being home to either a hip cocktail bar; axe throwing lanes; a gym or just bike racks and showers. To make sure you make the most of the opportunity, you must have knowledge which spans more than one sector and also detailed insights into where values are.
There may be buried treasure in your basement, but first you have to make sure you’re not stumbling around in the dark.
gregory .
stalcup@colliers.com | +44 (0)20 7344 6548
Basement restaurants viewpoint
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