RODEO DRIVE, WORLD-FAMOUS LUXURY LIFESTYLE HUB, RE-OPENS TO A SALES AND REAL ESTATE INVESTMENT SURGE

by | May 17, 2021 | Real Estate

As one top Los Angeles-based real estate broker says, if you are a luxury retailer, and you are located on Rodeo Drive, you’ve made it. It’s just three blocks, dotted with palm trees, home to over 100 of the world’s leading brands, melding with art and culture. Rodeo Drive is a force of influence in the retail world, the home to world-class fashion and luxury boutiques, felt as far north as Toronto. And it’s strength now (its vacancy factor has never been more than 5%) is another sign the luxury market is emerging nicely from the pandemic, even from a symbolic perspective.

Related: Falling rents and jumping vacancy rates: What landlords can do to protect themselves

The Rodeo Drive Committee reported a surge in real estate and business activity earlier this month. Vaccines and safety protocols propelled that. Governor Gavin Newsom  announced a full state-wide opening for June 15. Merchants on Rodeo Drive, some of the world’s leading luxury brands, are reporting double-digit increases in online and in-store sales. Boutiques are opened for regular hours now. New collections are displayed in windows. People are venturing out. Even international visitors are starting to return.

Canada’s best luxury website: New tenants and capital investment flowing into Rodeo Drive

On the luxury car front, according to Technavio, an auto industry research company, Ferrari, leasing a space on Rodeo Drive for the first time, had a share price jump of 27 per cent last year. Lamborghini’s order book is full through October. Porsche has the Porsche Design Clinic on Rodeo Drive, and reported in March that revenue reached an all-time high.

So while the re-opening of businesses from the pandemic continues to drag north of the border, it’s good to know that the appetite for luxury items is there. We should see something similar when we get our act together up here. That’s especially important for Canada’s luxury retail hubs. That includes places like Bloor St. and Yorkville in Toronto, Alberni St. in Vancouver, and Golden Square Mile in Montreal.

Piaget and Jaeger-LeCoultre are two major brands that have taken up new residences on Rodeo Drive. Cartier, Chanel and Dior are long-time residents and are investing in their presence there. Over the past year there was the $122 million sale of two adjoining landmark properties on the two-mile long Beverly Hills strip. That’s home to flagship stores for Alexander McQueen and Brioni. A private real estate investment and development firm made that purchase.

Regarding Luxury spoke with Mark Tronstein, whose family has owned multiple properties on Rodeo Drive dating back to the 1970s. We also spoke with Kathy Gohari, president-elect of the Rodeo Drive Committee. They talked to us some more about how boutiques, restaurants and hotels are re-opening as Covid-19 restrictions ease:

Kathy Gohari: All the talk has been about the rise in e-commerce shopping over the past year, but expand on the positives of the face-to-face shopping experience, and how that will impact business on Rodeo Drive coming out of the pandemic?

E-commerce is for sure here to stay. As digital experiences have become more compelling during the lockdowns, it will remain as important in the customer’s transaction as the experience of in-person shopping is. Beverly Hills is now in the yellow tier. Boutiques on Rodeo Drive are now open for regular business hours and indoor capacity is extended with strict safety guidelines.
Our customers feel safe, and are eager to return to the exclusive and bespoke personal shopping experience that is so unique to Rodeo Drive. The opportunity to see the new collections, feel the new fabrics, have garments tailored privately on the spot, and be immersed in some very special in-store design and installations is refreshing and uplifting. On Rodeo Drive, the experience goes beyond the stores, we’re known for our world class events.
This year, the first ever Tour d’Elegance will travel to Rodeo Drive on Father’s Day – it’s a moving exhibition of the finest automobiles touring through the City of Beverly Hills. It follows – in a COVID-safe way – the 26-year tradition of the celebrated Concours d’Elegance. There’s a sense of rediscovery post-pandemic, and Rodeo Drive is ready to welcome visitors back with open arms.

How has the psychology of people changed, coming out of a pandemic, regarding their view on luxury?

The desire for luxury has not gone away. If anything it has expanded. And we’re seeing a surge in demand for luxury goods – not just clothing, but watches and jewelry and even luxury cars. Customers are venturing out and spending at record levels. What I think has shifted psychologically is people’s values and this is reflected in how they perceive luxury.
Sustainability, responsibility, comfort and security are key factors to the luxury experience. Customers want to feel like they are making a contribution to the world, and they’re still living fluidly between home and work and they want the luxury of being comfortable and safe.

Do you think people will be more drawn to luxury after a year of lockdowns, sitting at home in loungewear, with nowhere to go?

Loungewear is absolutely going to stick around, but as things reopen, it’s certainly time to ditch the sweatpants. People are trying to put the last year behind them and establish a new normal. They’re looking to renew their wardrobes and many are bursting to dress up and venture out into the world in new luxury pieces. We have dedicated a whole episode on Rodeo Drive–The Podcast to this subject. It’s called Kick the Sweatpants, Get Ready to Dress. It can be listened to on Apple Podcast and all major podcast platforms.

Mark Tronstein: Even as north as Toronto, there is fascination with Rodeo Drive. What is it that makes it so interesting?

Rodeo Drive may be the only street in the U.S. that has held its value during pandemic. The exclusivity of a two-and-a-half block street continues to draw new tenants and significant capital investment.
When you see the level at which some of the major luxury brands are investing in enhancing and expanding their presence on the street – Cartier, Chanel and Dior for example, clearly they believe in the street long-term. There is nowhere else in the world with such a concentration of luxury boutiques and businesses, not to mention the blue sky, the sunshine, the palm trees and the ties to Hollywood and the entertainment world.
The street’s flanked by two iconic hotels, The Beverly Hills Hotel to the north and the Beverly Wilshire to the south. It is one of the most sought after and storied destinations in the world. And there’s a feeling you’ve made it if you have a boutique on Rodeo Drive.

In what sector of the luxury world do you see an uptick for Rodeo Drive, from a real estate perspective?

There has been constant activity, even during the pandemic, among brands that are moving quickly to take prime positions on the street and others that are investing in expanding their existing presence. At the same time, we’re seeing new luxury brands entering the market – these include Amiri, Onitsuka Tiger and Golden Goose, among others.

Private investors are also adding prime Rodeo Drive retail properties to their global portfolios, even during the pandemic. Another key development on the street is LVMH’s Cheval Blanc Beverly Hills hotel, designed by architect Peter Marino.

There’s real activity in hospitality, in fine dining with the recently opened Gucci Osteria by Michelin-starred chef Massimo Bottura, and in retail. Together they make Rodeo Drive a fashion thoroughfare like no other.

What properties on Rodeo Drive does your family own?

Our family has owned multiple properties on Rodeo Drive since the 1970s and has been fortunate to see Rodeo Drive transform into one of, if not the, premier luxury and shopping destinations in the world.

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