Retail space and situation in leading cities of Europe
Already last Monday we reported on the global findings of two reports of Cushman & Wakefield (USA) and today we give you some more details on the development in leading luxury and shopping cities of Europe
In view to European cities, it is noteworthy that Paris is the largest market with 209 luxury stores, followed by Milan (I) with 138 and London 162. The latter is home to the most diverse mix of international luxury brands and with just 21 % of the luxury market represented by domestic brands, in Paris 55 % are French, an the Italian brands dominate top streets with a share of 68 %. The three cities witness a queue of retailers waiting for the right units on the right streets, leading to marked increase in refurbishment and expansion of existing stores and optimising store networks and the emergence of new luxury locations such as St. James/Jermyn Street in London or the left bank of the Seine in Paris.
The demand for space in London from luxury retailers outstripped supply by a factor of ten (per midyear and to compare with 2011). 13 deals were concluded over the year to June comprising just over 6000 m2, whilst Italian, Swiss and French brands dominated the activity, key deals include US brand Tom Ford taking a new flagship 850 m2 on Sloane Street and British icon Belstaff taking 1800 m2 on New Bond Street. The London Olympics provided a trading boost to the already thriving luxury destinations in contrast to the disappointing figures observed in the wider London retail market over the same period. London is considered as a fashion hub with a rich mix of nationalities and tourists, and overseas shoppers are ensuring that luxury retail on these streets continues to thrive.
Tourism is also driving the luxury retail surge in Paris with foreign customers accounting for 40 % of turnover in the city’s department stores. The number of luxury hotels doubled over the past 20 years with several new five stars hotels opening in 2011, among Le Mandarin Oriental. Last year saw buoyant activity on Paris’ main luxury streets with the opening of several new stores and signatures including brands such as Chloé, Armani, Balenciaga on St-Honoré, Fendi, Yves Saint Laurant and Chanel on Avenue Montaigne and Berluti, Moncler, Burberry and Bally plus others on Rue Faubourg Saint Honoré. The left bank was the new luxury destination due to the openings of Hermès and Ralph Lauren flagships, followed by signature Tag Heuer, Burberry and the extension to the Louis Vuitton and the new Berluti flagship. Champs-Élysées is expecting the soon opening of a new Tiffany’s flagship store.
The Italian luxury retail sector performed well and with strong trading in Asian markets, some brands were enabled to invest in the relocation or restyling or extension of their Italian stores such as Valentino in Via Montenapoleone in Milan, the street is considered worldwide as a symbol of the extreme luxury market and has been registering increased demand from the main brands and it is not unusual for locations with a double frontage to cost between EUR 7000 to EUR 9000. With these prospects, landlords are now more willing than ever to secure luxury retail tenants and are looking to maximise the value of their properties and rental capacity by carrying out significant refurbishment projecs such as that undertaken by Gruppo Statuto in Via Montenapoleone to develop four new stores where there are currently Burberry and Dior.
The Russian capital Moscow is tapped because of the strong growing consumer base and stable rents over the year in the luxury sector centred in Moscow’s Tverskay. There are mostly franchise stores and brands are increasingly keen to set up their own operations and stand alone high streets units and LVMH and Richemont Group are leading the pack and Prada Group extended its presence by opening flagship stores for both Prada and Miu Miuon Stoleshnikov Pereulok.