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The luxury goods group LVMH is investing billions in real estate, reports the Wall Street Journal.
The company’s strategy is to buy older properties and create new city centers.
Last year the company spent $2.1 billion (1.96 billion euros) buying property in Paris ahead of the Olympics.
This is a machine translation of an article from our US colleagues at Business Insider. It was automatically translated and checked by a real editor.
Louis Vuitton Moët Hennessy (LVMH), the brand behind some of the most recognizable names in fashion, wine and spirits, is transforming older neighborhoods around the world into luxury plazas and shopping centers.
Like that „Wall Street Journal“ (WSJ) reports, the parent company of brands like Louis Vuitton, Dior and Fendi, along with private equity firm L Catterton, is betting billions on in-person shopping by buying old malls, hotels and warehouses and converting them into mixed-use centers focused on their brands are aligned.
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LVMH is trying to revitalize historic neighborhoods
According to the report, much of the strategy involves buying properties in sometimes historic neighborhoods – such as the Pont Neuf district in Paris, where LVMH sues The historian who were concerned about the integrity of the 150-year-old La Samaritaine department store – and transforming them into wealthy neighborhoods by working with world-class architects like Frank Gehry to build shopping centers.
Michael Burke, head of the LVMH Fashion Group, told the WSJ: “We are creating a city.”
“We’re taking something that doesn’t exist yet and when we’re done, we’ll have created a city center with residential, retail and cultural aspects,” Burke told the magazine. “Most of our brands were brands that had fallen on hard times. Just like this property, we bought it because it was in disrepair. In ruins.”
The “rundown” properties include areas like Miami’s Design District, where the company transformed twelve acres of warehouses and abandoned office buildings into a luxury area with museums, offices and – of course – a retail center. Over the course of 14 years, LVMH and a local developer took over blocks of the warehouse district. Now, rental prices for retail space in the area have increased by 200 percent since 2019, he said Miami Design District in a blog post citing investment management firm JLL.
Burke told the Journal that the company entered the world of real estate in 2010 when he convinced CEO Bernard Arnault to revitalize Miami’s warehouse district. The company now has several locations in other international cities, including Paris and Montreal. According to the Journal, the company spent $2.1 billion (1.96 billion euros) last year buying real estate in Paris ahead of the Olympics.
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The luxury brand’s real estate purchases are controversial
The luxury brand is one of several that spends billions on luxury stores and experiences. Kering, the company behind Gucci and Saint Laurent, spent $1.4 billion (1.3 billion euros) on a building on Milan’s Via Montenapoleone.
Chanel and LVMH are also interested in buying properties on New York’s Fifth Avenue and on the Champs-Élysées in Paris, the Journal reports. However, the large-scale purchases are not without controversy.
In Paris, the reported „New York Times“the luxury giants buying up real estate in the Marais district of Paris are helping to squeeze out low-income immigrant businesses.
“This used to be a real neighborhood with families and kids,” Amar Sitayeb, a mini-mart owner, told the Times about the Marais district. “Now it’s all gone.”
The Journal also reported that residents of Montreal, where the company is investing $1.5 billion (1.4 billion euros) in a mixed-use luxury shopping center called Royalmount invested are concerned about the impact of the development on the already established town center. The Royalmount replaces one historical industrial site.
„Global News Canada” reported in 2019 that the project is estimated to increase car traffic by 20,000 to 70,000 vehicles per day. The company responded by building a pedestrian bridge connecting the shopping center with the Montreal’s public transport network connects.
“Without proper planning and without integrated and implemented transportation alternatives, this is almost a recipe for chaos,” Saint-Laurent County Mayor Alan DeSousa told Global News at the time. LVMH did not respond to a request for comment from Business Insider.
Read the original article in English here.