MEXICO CITY — Mexico’s most expensive shopping street is suffering from lackluster sales following a remodeling project dogged with controversy and delays.
The $30 million facelift of Presidente Masaryk, home to stores for a string of global luxury brands, has yet to be completed, fueling criticism that efforts to build the Mexican capital’s answer to Fifth Avenue have gone awry.
“There has been no positive impact from the project,” said an insider at Louis Vuitton, which operates a two-story standalone store on the two-mile strip, located in Mexico City’s swanky Polanco quarter. “People continue to come to our store for the brand, not the street.”
Ferruccio Tinghi, who licenses the nearby Max Mara shop, agreed. “I am not selling what I hoped from such a massive project.”
The initiative to replace 550,000 square feet of sidewalks with elegant Spanish granite, install 330 lighting fixtures and place flower gardens in gritty traffic islands began in January 2014, with a completion deadline of June 2015.
But more than two years later, city development agency Autoridad del Espacio Publico has yet to finish grounding the lighting fixtures, with power cables and generators lying on the streets. Garbage containers are also largely absent while some security cameras have yet to switch on, retail executives said, adding that the city failed to achieve architect Bernardo Gomez Pimienta’s initial plan to add cachet to one of Latin America’s top shopping destinations.
Maritere Ruiz, who heads Polanco neighbors’ association The Voice of Polanco, dubbed the project “a disaster,” adding that the Autoridad and a Masaryk real-estate owners’ association kept the project under wraps, failing to consult with residents and retailers.
“The street closed in January . It was supposed to fully reopen in July  but didn’t until November,” said Ruiz. As part of a sharply delayed and “disorganized” schedule, “They started digging without telling us. It was all badly planned; many people were upset.”
Luxury labels including Pal Zileri complained that front-door sidewalks were dug up without their knowledge, hurting sales. As construction swung to full force, many stores closed while others, including Prada and Spain’s Rosa Clará, moved to shops-in-shops in department-store chain El Palacio de Hierro’s newly refurbished Polanco store located just a few blocks away.
Following the delays, merchants are struggling to generate enough sales to offset an average 40-percent increase in rents, according to Ruiz. “The Hugo Boss building rents for 1 million pesos [$57,300 at current exchange] a month,” she noted. “Many businesses have been forced to close.”
Parking has also changed dramatically, negatively impacting sales, several merchants claimed.
Before the project, “My customers parked in front of the store,” Tinghi said. “Now they have to use valet parking or park far away.”
Last-minute modifications halved the strip’s front-door parking spaces, forcing shop owners to hire valet staff and angering wealthy customers used to more private arrangements, Tinghi claimed.
Add this to “the city’s disorganized and irresponsible development and you have a traffic nightmare that makes it harder to come shop,” he noted. “I have clients that make a 5 p.m. appointment and have to cancel because of traffic. It’s one of Polanco’s worst problems.”
Plans to install glitzy, 3-foot Spanish-stone bollards to prevent sidewalk parking also fell through after the Autoridad installed shorter and cheaper metal posts that “look horrible,” Ruiz charged.
While new and gleaming silver-stone walkways have added a regal feel, she described them as “black and discolored.”
Roberto Remes, director of the Autoridad del Espacio Publico, conceded neighbors have reason to carp.
“This project had many management errors and the city must learn from it,” he said. “We had to modify the bollards that were originally going to be made from Galicia [Spain] granite. At first they were low, then they were high, then a mix of both that no one liked 100 percent.”
Electricity wires and boxes remain strewn about, he confirmed, adding that the Autoridad is working with Mexican power-grid operator CFE to ground them as soon as possible.
He rebutted views that parking is a mess, however, noting that Mexico City must step up infractions against drivers bent on parking on the curb. “The whole city is full of cars; the rules need to be enforced,” he said.
Reducing parking was pivotal to boost Masaryk’s pedestrian appeal and drive new customers, according to Remes.
“Masaryk is much more pleasant to walk in now and is the best street in Mexico,” he boasted, adding that the Autoridad fulfilled 80 percent of Pimienta’s master project. “Most global high streets have done well by limiting car access and committing to pedestrians. You have Fifth Avenue and Madrid’s Serrano as proof.”
Remes insisted merchants are better off.
Before the undertaking, “Masaryk’s days were numbered,” he said. “Not many brands were willing to stay there, especially with competition from Las Lomas [an upscale area with new high-end shopping malls] and Madero Street [another recently renovated strip] in the City Center. The transfer value [for retailers switching stores] is much higher now. It used to be zero.”
To lift sales, Masaryk must woo fast-fashion and midmarket brands like Zara, H&M or Forever 21 instead of solely catering to luxury labels, Remes contended.
All said, Polanco’s real-estate owners and residents will get a “contribution tax” discount (set up to finance the refurbishment) as the city moves to compensate its mistakes, Remes said.
Meanwhile, El Palacio de Hierro’s revamped store — billed as Latin America’s largest luxury retailer — has brands on the Masaryk nervous. A slew of luxury brands, including Gucci and Prada, have set up their Mexican and Latin American flagships there, drawing traffic and cannibalizing sales of stores on Masaryk, observers said.
The Vuitton insider said that’s not the case for the French company, which sells more exotic (such as crocodile or python bags) and limited-edition items in Masaryk and more basic merchandise at El Palacio. Watches and men’s apparel, for example, are also exclusively available at Masaryk, the source added.
Tinghi is following a similar strategy at the Max Mara corner in El Palacio, which stocks one-tenth of what he sells in Masaryk.
“I carry the more exclusive items in the store,” he said. “Some brands are suffering from cannibalization but others are not. It really depends on what you are selling and to which customer.”
Beatriz Calles, director of Mercedes-Benz Fashion Week Mexico, which closed last Friday, agreed that Masaryk’s sales have underperformed but noted a soaring dollar and sluggish economy are also to blame. She said the strip drew huge crowds after it was opened and while the project was troubled, “not all brands were expecting huge sales increases.”
Niobe López Ostolaza, who owns the Frattina boutique carrying Escada, is hopeful business will pick up. “During the works, sales fell 40 percent but we started recovering in June,” when her block reopened ahead of others in the fall.
Goyard, which recently set up shop next door, and other neighbors Salvatore Ferragamo and Burberry are also bouncing back from big sales dips in 2014 and 2015, according to Ostolaza. “I am happy with how they fixed the street,” she said. “More people are coming. However, it’s not finished and traffic is still a problem.”
Ostolaza is also unconcerned about El Palacio’s new flagship. “In the U.S., you have Saks and Bergdorf Goodman and the Fifth Avenue boutiques,” she said. “They all coexist just fine. I think brands will find their way.”