Skift Take

Nothing in life (and business) is fair. Soho House is able to expand at lower development costs with a special landlord-tenant relationship unavailable to the average mom-and-pop company.

Series: Early Check-In

Early Check-In

Editor’s Note: Skift Senior Hospitality Editor Sean O’Neill brings readers exclusive reporting and insights into hotel deals and development, and how those trends are making an impact across the travel industry.

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The global chain of members-only clubs Soho House inched closer to a debut on the New York Stock Exchange last week by submitting a prospectus to the U.S. Securities and Exchange Commission. That filing provided a lot of intel into how the brand built on exclusivity courts developers to fuel its growth. The company — which plans to go on the stock market as Membership Collective Group and symbol “MCG” — plans to have 46 Soho Houses in operation by the end of 2023, with a long-term growth target of adding three to five properties each year. Marketing Soho House’s cool factor to landlords can help achieve that growth at more favorable lease terms. “Our real estate partners benefit from the impact of the Soho House brand on the value of their underlying property and surrounding neighborhood,” the MCG filing states. “This enables us to achieve favorable lease agreements, increase tenant improvement allowances from landlords to support our capital light expansion, and in some cases receive a share of the upside in the value of the property.” Soho Houses in London’s Shoreditch neighborhood, the Meatpacking District in New York City, Barcelona’s Gothic Quarter, and downtown Los Angeles were opened in this manner. The filing goes on to note MCG is “constantly approached by landlords and developers” to consider their projects for new Soho House locations and serve as an anchor tenant. While the rent revelation probably elicits sour grapes from mom-and-pop retail tenants who are stuck paying full rent, the practice isn’t entirely unique to Soho House. “Landlords understand the importance of finding the right tenant for their space,” said Aaron Jodka, national director of capital markets research at Colliers. “It drives acti