US property giant Pembroke has struck a trifecta of luxury retail leasing deals in its revamped T&G building on Collins Street, Melbourne, after signing up iconic Italian fashion designer Versace for its first stand-alone store in Australia.
Versace, famous for its leather accessories and outrageously expensive garish outfits, has signed a 10-year lease for a 307-square metre company-owned store with prime Collins Street frontage in the former banking chamber, where it will trade alongside an expanded Gucci store and another new tenant, Bottega Veneta.
The only other Versace store in Australia is in Westfield Sydney on Pitt Street Mall.
Rents in the new T&G retail arcade on the corner of Collins and Russell streets are understood to have been struck at about $4000 per square metre in a pocket of Collins Street peppered with luxury brands including Louis Vuitton, Dolce & Gabbana and Armani.
Pembroke, the investment arm of Boston fund manager Fidelity, took control of the 1930s T&G Building in a $275 million deal in 2015 and has spent millions refurbishing the ground-floor shops and the office floors above.
Matthew Knight, head of Australia for Pembroke Real Estate, told The Australian Financial Review the three luxury tenancies would make a “real statement” at the T&G building’s Collins Street entrance and went “hand in glove with other tenants in the area”.
“There’s a distinct shortage of retail space at this end of town,” Mr Knight said.
He said he did not expect the arrival of Amazon in Australia to have much impact on the luxury retail sector.
“I think people who shop for luxury go for the experience and to get looked after. You don’t get that personal touch and attention from shopping on Amazon. I think it will be more the middle-tier retailers that will be impacted,” he said.
The Versace, Gucci and Bottega Veneta leasing deals were negotiated on behalf of Pembroke by Zelman Ainsworth, head of Victorian retail leasing at CBRE. Another luxury retailer, Max Mara, is also part of the retail mix.
Mr Ainsworth said there was strong demand from luxury retailers to open large stores on Collins Street on the back of the performance of luxury sales over the 36 months in the Melbourne CBD that is being supported by both local and international tourist customers.
Keep up with Commercial Real Estate news.