MILAN — Move over Via Montenapoleone, there’s a new piece of hot real estate in town.
Galleria Vittorio Emanuele II, the elegant 19th-century shopping arcade that sits beside the city’s famed cathedral, is sprucing up, and Gucci and Louis Vuitton are the first ones to get in on the act.
Local government officials here have given both luxury brands the green light for 12-year leases in the city-owned Galleria starting from Jan. 1, 2004.
“I hope that this will bring good business to both Louis Vuitton and Gucci,” said Giancarlo Pagliarini, who manages the city’s real estate assets. “I don’t know if the two stores will generate a lot of sales, but they will act more as image enhancers.”
Pagliarini spearheaded a plan to increase the Galleria’s rents and make it a major revenue driver — a project that had its critics. Some detractors feared the structure would eventually become a mall, deserted at night when the stores close. Ultimately, Pagliarini and the city’s coffers prevailed.
Louis Vuitton will take over a space previously occupied by a travel agency, just across the way from the oldest store of Prada, which is a longtime resident and so far the area’s only luxury inhabitant.
Gucci will move in practically next door to Vuitton, replacing historic coffee bar Il Salotto. An interesting catch: City officials, eager to preserve a diverse mix of establishments in the Galleria, have convinced Gucci to run an in-store café.
A Gucci spokesman said the company has no further details at this point. Agostino Ropolo, chief executive of LVMH Moët Hennessy Louis Vuitton’s Italian unit, said Vuitton plans to sign its lease contract in the coming weeks and the store should be open in late spring.
“We believe the Galleria is an area of the city with a large amount of commercial potential,” Ropolo said. “We believe that the arrival of the Louis Vuitton and Gucci stores will improve the Galleria’s image.”
New residents mean a significant scene change for the Galleria. Once considered the heart of Milanese elegance and swank, the quality of establishments has eroded over the years. While it is still home to Prada and institutions such as the nouveau-style café Zucca and ritzy restaurants Savini and Biffi, the Galleria’s other inhabitants are decidedly downmarket. Tacky souvenir stands and even a McDonald’s make their home there.
The city is hoping to change the ambience and is jacking up rents accordingly. Still, the rates are appetizing for luxury groups used to sky-high multiples for spaces on Via Montenapoleone and its side streets. Gucci and Vuitton will pay $1,343, or 1,190 euros, annually per square meter of selling space on the ground floor. Rates for office space, storage and bathrooms are lower. (There are about 10.76 square feet in a square meter.)
Analogous sales floor space in the Via Montenapoleone area runs in the ballpark of $1,918, or 1,700 euros, to $4,837, or 4,286 euros, a year per square meter. Dollar figures have been converted from the euro at current exchange.
Antonio Soccol, a director of real estate firm FIM, said the Galleria area is one to watch.
“People will become interested in that space again, it will reclaim some glamour — just like when (La Scala reopens next year) — there will be more people passing by that area,” he said.