Apparently rents are going up in Soho’s Chinatown enclave. The Observer seems very confused indeed about this:
The doubling and more of rents and the pressure to convert restaurant space into residential property are causing long-established family businesses to close, social networks to break up and generic catering businesses with more financial muscle to move in. A famous and attractive manifestation of London’s celebrated diversity will dilute and fade.
Big trouble in little Chinatown as rent rises force restaurant owners out
Other examples include threats to markets and industrial space in other parts of the city, to the music shops of Tin Pan Alley, much-loved clubs or independent-spirited restaurants. There are the squeezing out of small but useful shops and other businesses, the city’s inability to house its poor, the exclusion by house price of the people who provide its services, from cleaners and carers to the designers and creatives who are said to add so much to London’s international lustre.
It is confused to both complain about the shortage of residential space and also about the conversion of commercial space to residential space in the same city, isn’t it? But the real problem of course is the headline:
The Observer view on the threat to London’s Chinatown: its loss will be no one’s gain
Well, let’s see. The landlords will gain, they will be getting more money for their property. But that’s not all: all of the users of the properties will gain as well. If the value in use of some part of Soho was greater as a chop suey house than as a house then the chop suey place would produce a higher valuation for the property. We thus don’t need an agonised “conversation” about what provides the greater value. We only have to go and look at the prices. If the price is higher as a not chop suey house, which is what The Observer is complaining about, then quite obviously all of the users of that joint value the joint at a lower value than the alternative use.
After all, this is the very definition of societal wealth creation: moving an asset from a lower to a higher valued use.
It may well be that some looking for a cheap chow mein will be disappointed at not being able to get one from that now residential building. But if the customers in aggregate were in fact willing to pay the amount needed to keep the restaurant in place then it would still be in place, wouldn’t it?