Louis Vuitton boss and Irish developer agree Bond St deal
Daly and adviser Savills soonset a 10-day deadline for talks, knowing that Arnault, France’s richest man, was anxious to avoid an auction via Nama that could result in a sale to rivals such as Chanel.
“LVMH was determined not to let what happened with the DKNY store happen again,” a source said. The freehold on DKNY’s shop at 27, Old Bond St was sold to Chanel in 2010. This derailed LVMH’s plans to replace its DKNY branded outlet with a Dior shop and left Arnault furious, the source said.
Arnault, via his agent Harper Dennis Hobbs, and Daly agreed a £300 million (€360m) deal within the 10-day window last month. All parties declined or were unavailable to comment.
Arnault’s purchase shows how Bond St, Britain’s most expensive shopping destination, is fast becoming a battlefield for deep-pocketed fashion dynasties that are increasingly willing to shell out hard cash to guarantee ownership of top sites and hedge against spiralling rents.
Retailers accounted for more than three-quarters of property deals on Bond St in 2010, consultancy group CBRE said, paying out over £250m. Executive director Phil Cann said the trend would accelerate.
Unlike mid-market retailers, luxury brands have bounced back strongly from the 2008 downturn on the back of strong demand from emerging markets such as China and Russia.
The acute space shortage on the half-mile stretch, combined with strong demand from global brands that see a Bond St presence as essential to European expansion plans, may boost rents from £975 per sq ft to £1,500 by 2013, consultancy Cushman & Wakefield said.
Jonathan O’Regan, from Savills’ central London investment team, said the battle between luxury retailers and the families behind them has been heating up since French luxury fashion house Hermes bought British rival Asprey’s New Bond St home for £75m in 2009. “There will never be enough stores on Bond St to satisfy retailer demand and therefore by owning them, the retailer protects their presence on the street in the future,” Mr O’Regan said.
The race to own space is injected with added tension as growing numbers of retailers become landlords to their rivals.
Besides the Chanel-owned DKNY store, the Maramotti family behind luxury clothing retailer Max Mara bought stores occupied by fashion houses Etro and Bottega Veneta in 2010, while diamond magnate Laurence Graff has been a long-term landlord to Cartier’s New Bond St store.
Retailers are keen to acquire competitors’ buildings as they will be able to take control of them at some point in the future when leases expire, Cann said.
“Just look at Hermes and Asprey. As it gets closer to when the lease ends it’s not going to be a friendly conversation,” one agent who declined to be named told Reuters.
On neighbouring Oxford St, the families behind more mainstream retailers Inditex and Hennes and Mauritz have bought the buildings that house their respective Zara and H&M clothing brands.
