California Apparel News

Call it the Rodeo Drive restoration. For the first time since the Great Recession, there is almost no vacancy on Rodeo Drive, the international luxury shopping street in Beverly Hills. Out of more than 100 storefronts on the street—and two mall enclaves, Two Rodeo Drive and Rodeo Collection—only three storefronts are available for lease, according to Jay Luchs, executive vice president at commercial real estate company CBRE. Since 2003, he has been responsible for 35 deals on the street.

At the same time, some of the famed thoroughfare’s iconic retailers are in the midst of intricate renovation projects. Some of the projects are expected to take up to a year to complete, a relatively long time in the construction business.

Prada recently closed its three-story “Epicenter” boutique, designed in 2004 by star architect Rem Koolhaas, in order to embark on a year-long renovation.  The Italian fashion house opened a temporary boutique next door at 337 N. Rodeo.

Prada’s temporary space formerly housed Italian men’s suiting house Brioni. The suiting brand is holding a grand opening for its new boutique, at 459 N. Rodeo, on May 10.

Also working on a lengthy renovation is Hermès, which closed its permanent shop at 434 N. Rodeo and opened a temporary space at 428 N. Rodeo.

Last month, the city of Beverly Hills’ architectural commission approved plans for the remodel of the Christian Dior shop at 309 N. Rodeo. The remodel will feature a glass panel flanked by brushless stainless steel frames, all of which will be illuminated by LED lighting.

Italian jeweler and accessories house Bulgari is moving from a high-profile space on the corner of Rodeo Drive and Wilshire Boulevard to a bigger space at 401 N. Rodeo, located on the corner of Brighton Way and Rodeo Drive. Louis Vuitton is currently housed at a more than 35,000-square-foot emporium at 295 N. Rodeo, and it will double its space when it takes over the current Bulgari emporium at 201 N. Rodeo.

Jewelry houses Van Cleef & Arpels and David Yurman are in the midst renovating spaces at 300 N. Rodeo and 369 N. Rodeo, respectively.  The Valentino and Cavalli fashion houses recently wrapped up lengthy renovations of their Rodeo spaces.

Zegna recently unveiled a renovation at its shop at 301 N. Rodeo in November and is rumored to be next in line for the temporary Prada space.

The high-profile street also will introduce new brands this year. In July, French watchmaker Patek Philippe will open its first American boutique on Rodeo Drive. Veteran Rodeo shop owner Thomas Blumenthal divided the former Valentino space at 360 N. Rodeo to house the Patek Philippe and a Rolex store, which will open in June.

Rodeo’s real estate shuffle is a sign of a good economy, said Blumenthal, president and chief executive of Gearys, located at 365 N. Rodeo. “For a couple of years, people were cautious,” Blumenthal said of 2008 and 2009. “But business is robust again. They’re doing all of the things they wanted to do in the past three years.”

The renovations are a vote of confidence in the street, Luchs said. “They’re not just painting the walls,” he said. “They’re spending millions of dollars. They’re thinking of their future.”

Renovating a flagship store on a high-profile street such as Rodeo means creating “a destination at a destination,” said Lee Sammartino, chief executive officer at Ikonic Tonic, a Solana Beach, Calif.–headquartered brand agency that features a forte in retail architecture. Sammartino was not involved in the Rodeo renovations, but he estimated a single renovation project cost $13 million and up. 

Rodeo stores take a long time to renovate because high-profile architects are often associated with the renovations. Their intricate plans take longer to execute, said Cheryl  Friedling, a deputy city manager for the city of Beverly Hills. These shops are renovating in an area where it takes a lot of money to keep doors open. Per annum, rents on the 300 block of Rodeo Drive range between $450 and $500 per square foot. On the 400 block, per annum rents range from $350 to $425, CBRE’s Luchs said.

The entire street’s sales are estimated to add up to $1 million each day, said Jim Jahant, president of merchants association The Rodeo Drive Committee. He is general manager of the Brooks Brothers flagship store on Rodeo Drive.

Rodeo Drive attracts tourists from around the world, as well as wealthy locals who shop the street for exclusive luxury items. “Most of the stores are flagships,” Jahant said. “They carry items not in other stores.”

Magazines such as US News & World Report acknowledge Rodeo as one of America’s top shopping streets. However, it might be hard to make a profit there, said Jeffrey Van Sinderen, a senior analyst for B. Riley & Co., a Los Angeles–based financial-services firm.

A store would have to do great volume to pay for the rent, considered the highest commercial rent in Los Angeles County. So many people pass through the street that it’s worth the price tag, Van Sinderen said. “It’s an advertising thing. It’s a way to showcase your product and brand in one of the top five streets in the world,” he said.

But the street lives up to its reputation for Garry Hogarth, chief executive of United Kingdom lingerie brand Agent Provocateur. The brand opened a 1,400-square-foot store at 242 N. Rodeo in 2011. Agent Provocateur’s Rodeo Drive shop is one of the top-performing shops in its fleet of more than 10 boutiques in the United States.

“There’s not as much traffic,” Hogarth said, comparing Rodeo with other locations such as Bal Harbor in Miami and Newbury Street in Boston. But the Rodeo Drive shop is the site of some of Agent Provocateur’s highest transactions and highest conversion rates (turning casual visits into sales) for its American retail operation. Being located on a street with deep-pocketed luxury brands has helped attract wealthy consumers, which boosted profits.

“Everything has to be cost-effective,” Hogarth said. “We need to be in locations that make money, but these don’t always relate to high [foot traffic]. Rodeo presents many other advantages.”

Click here for images of Rodeo stores.