PARIS — It’s history: the old Left Bank versus Right Bank debate. A flurry of urban renewal projects along the northern flank of the Seine river in Paris has dissolved the age-old rivalry, calling on visitors — and retailers — to choose from an extensive lineup of revitalized neighborhoods.
The rehabilitation efforts come with the rise of digital commerce, the force driving retailers to rethink store formats and locations as they pull out all the stops to draw people into a boutique.
Having turned away from the expansion-fueled growth that pushed brands to plant their flags in as many places as possible, the focus now is on fewer, choice locations.
“The desire to be in the right location in the most appropriate city is as important as ever and this is helping drive prime rental growth,” noted research teams from commercial real estate group CBRE in their 2018 real estate market outlook for Europe.
“With numerous indicators showing a strong move toward city living, the focus for retailers across Europe will be to get their city strategy correct,” the analysts said.
This has prompted retailers and real estate investors to flock to central Paris.
In a stark illustration of this trend, the site of a future Apple store on the Champs-Élysées just changed hands for nearly 600 million euros — a deal that garnered attention well beyond real estate circles in the French capital.
The nearly 62,000-square-foot Haussmann-style building is being renovated by British architect Sir Norman Foster for the tech giant’s European flagship, scheduled to open at the end of the year.
Sources say Christopher Descours, owner of luxury shoe brand J.M. Weston and Piper-Heidsieck Champagne, purchased the building for around 100 million euros in 2009 before investing in rehabilitating it, and that a rental contract has been signed for 14 million euros a year.
The new investor was German pension fund Bayerische Versorgungskammer, or BVK, whose investment is managed by the Texas-based real estate firm Hines.
The acquisition fits the realtor’s strategy of focusing on purchases in “prime permanent retail assets across Europe,” noted Lars Huber, chief executive officer of Hines Europe, in a statement.
The company expects to facilitate further transactions in high street retail, said Xavier Musseau, who directs the real estate company’s operations in France. Musseau, who cited a bounce-back in tourism in the French capital as helping to spur the real estate market, said that he is seeing property investors in addition to BVK showing an interest in increasing their retail holdings.
“There is a feeling of renewal, good energy in France at the moment — Paris, as you know, was the city that saw the biggest investments in luxury in 2017,” said Amandine Rohmer, director of the vast new Louis Vuitton flagship on Place Vendôme. She is conscious of the store’s influence on the area, but also noted a recent wave of renovations of high-end hotels like the Ritz and the Crillon, as well as the extension of Hôtel Costes under way.
“Retailers have followed the flow of international customers who have gradually shifted to the Right Bank; this has led to the emergence or the strengthening of districts with solid values, such as Le Marais or Rue Saint-Honoré,” said Cushman & Wakefield in its luxury retail market overview and outlook for 2018. The analysts predict rising rental values on the most sought-after streets, where larger spaces will likely become increasingly scarce.
A number of brands have set up flagships recently on the Rue Saint-Honoré, both feeding and tapping into traffic from the Place Vendôme, which is also home to a soon-to-be-reopened Boucheron boutique.
The Louis Vuitton store counts around 500 visitors on normal days to around a thousand at busier times, and has even surpassed 2,000 on several occasions, according to Rohmer, who estimates about 85 percent of the traffic enters from the Rue Saint-Honoré while 15 percent comes from the Place Vendôme.
Farther down, one of the street’s best-known destinations, Colette, shut its doors last year after serving as a key draw of fashion hungry fans for 20 years, generating interest in the neighborhood. Saint Laurent snapped up the location, which it is now refurbishing.
Chanel, meanwhile, is also expanding its presence between the Rue Cambon and Rue Duphot, both of which spill into Rue Saint-Honoré, next to the temporary Christian Dior pop-up store that was set up with an eye to more permanent roots.
“The presence of Dior on the Rue Saint-Honoré is certain,” said Tatiana Bittencourt, an architect who works for the brand.
Knight Frank estimates the street tops the list of store openings in the city with around 20 percent over the past five years, outpacing Avenue Montaigne and the Vendôme — Avenue de la Paix stretch, each with a 12 percent share.
“It’s true that there’s commercial activity that has moved to the Rue Saint-Honoré, so we are taking part in it. With the hotel openings, it’s become an attractive center, also because there are lots of restaurants,” noted Florence Masurel, who heads Louis Vuitton’s French operations.
Farther east, in the Marais, Galeries Lafayette is remaking an entire neighborhood, connecting a series of buildings leading to a cultural center — an art foundation backed by the group — through courtyards, lined with Eataly cafés and upscale apparel stores, including Gucci and streetwear brand A Bathing Ape.
Retailers need to create places where people want to spend time, explained Eric Costa, ceo of Citynove, the department store group’s real estate company. On a recent visit to the site, still under construction, Costa pointed out details of the project, including work by Martin Boyce, a Turner Prize-winning sculptor from Scotland. Boyce designed paving stone patterns, a towering gate and a glass ceiling decorated with geometric shapes — inspired by the Cubist trees of Robert Mallet-Stevens and the Martel brothers.
Meanwhile, real estate specialists are flagging a drop in development of shopping centers in Western Europe. Last year, new shopping center completions in the region declined 23 percent, according to Cushman & Wakefield. The analysts noted technological development, changing consumer behavior and the growth of e-commerce are upending the approaches of retailers and shopping centers.
Even Ikea is moving into Paris. Famous for its oversize, out-of-town locations, the Swedish retailer is investing 6.6 million euros in a more than 581,000-square-foot space on the Boulevard de la Madeleine. The store, which is due to open by mid-2019, is meant to help the company expand its digital strategy, showcasing goods that can be ordered and delivered, as well as emphasize products suitable for small spaces.
French real estate giant Unibail Rodamco, which is focusing on higher end shopping malls and is in the process of absorbing Westfield, recently refurbished a shopping center on the site of the city’s historic food market, Les Halles. The huge glass and steel canopy makes for an airy space, but one protected from the rain.
Sure to drive more traffic to that area, the Pinault family, owners of luxury group Kering, is refurbishing the round, historic Bourse de Commerce building in a project led by Japanese architect Tadao Ando.
Other projects along the Right Bank of the Seine include a vast restoration project of the Grand Palais building, partly financed by Chanel, known for holding elaborate fashion shows in the venue, and the remaking of La Samaritaine department store, a site belonging to LVMH Moët Hennessy Louis Vuitton that will be home to an upscale Cheval Blanc hotel, shops, offices, low-income housing and day care for children.
“Parisian luxury is not lacking steam or projects from brands placing their bets on several main strips of a market that is limited in space and to a restricted number of actors,” said Knight Frank, of the high-end real estate market, in a recent study.