South Ken luxury shop rents soaring

The latest deal at 48 Pelham Street, at the junction of Brompton Cross, has set a record rent in the area.

US designer Carolina Herrera has successfully outbid rivals for the lease of the 2000 square foot store.

Kitchen La Frenais Morgan, agent for the landlord Wellcome Trust, is thought to have received seven bids for the store and Carolina Herrera has now agreed to pay around £325,000 a year in rent and around £350,000 in key money to secure it.

Herrera will be the latest addition to the street that is home to Chanel, while Stella McCartney will open a shop this month. London's west end has seen rents rocket in countless new locations as luxury goods retailers open large flagship shops to attract wealthy Chinese, Middle Eastern and Russian shoppers.

Rents in Mount Street in Mayfair have nearly doubled since Marc Jacobs and others set up shop in the past five years while in Dover Street and Albemarle Street rents have also leapt and have attracted the likes of Alexander McQueen.

Bond Street remains the most highly desired street. Top rents, and the premiums paid for stores, are still sky high despite difficult economic headwinds. A small Bond Street store could cost £500,000 a year in rent and £1 million or more in key money to secure the lease.

Luxury brands have also begun to buy freeholds of shops rather than rent them to stop rivals getting their hands on coveted stores.

A raft of deals in the past four years including Hermès buying Asprey's store, LVMH buying its own Louis Vuitton store and Chanel buying DKNY's store on Bond Street have kept prices at boomtime levels.

Property agent Harper Dennis Hobbs is thought to have advised Carolina Herrera.