July 4th, 2014
The value of luxury: America becomes absolutely fabulous
by Laura Chesters
The US has a taste for European luxury goods, as Francois Henri Pinault tells Laura Chesters, and labels like Mulberry and Burberry are betting their shirts on it.
The days of gang wars – Miami Vice style – might be long gone but a battle for the luxury brands has led to a three-way tussle, all competing for the 14 million international and domestic visitors to Miami every year.
Developer Craig Robins, with a $1bn project in a run-down part of the city, is challenging established luxury locations in a battle for big spenders.
His Design District, with plans for 60 luxury shops, will compete with the queen of the luxury scene, Bal Harbour – an open-air shopping centre bursting with 100 shops, restaurants and perfectly designed tropical hanging plants and koi carp ponds. The third contender is the Aventura mall – a mega shopping district in the north of the city.
Bal Harbour was opened in 1965 and is still owned by the founder and his family – Stanley Whitman. The centre, which is set to open another 30 shops in an extension by 2019, boasts some of the best names in luxury from Gucci to Chanel and is the world’s most productive centre based on sales per square foot of around $3000.
But Mr Robins, who made his fortune redeveloping Art Deco hotels in South Beach, is trying to steal Bal Harbour’s crown.
Mr Robins started buying up properties in the run-down midtown neighbourhood in 1994 and claims to have invested close to £1bn on the project with help from lending banks and an investment from partners such as L Real Estate, a fund in which LVMH is a minority investor.
So far this has paid off as he boasts agreements with Burberry, Hermes and Prada as well as 15 of LVMH's brands and 12 of Swiss group Richemont’s brands.
Gucci-owner Kering is in talks to open some of its brands in the final phase of the scheme. The Design District will open in three phases and should be complete by 2016.
Mr Robins claims Bal Harbour has been too stubborn when dealing with brands. Part of Bal Harbours' success was a clause it made tenants sign up to. Brands opening in Bal Harbour couldn't open stores within a 20 mile radius. For years Bal Harbour had a monopoly.
But a deal with Bernard Arnault's LVMH group in 2011 changed everything. LVMH's flagship Louis Vuitton brand decided to quit its store in Bal Harbour when the lease was up and opened in the Design District and Aventura.
This was the impetus for other brands to follow. Louis Vuitton still has a presence in Bal - it has a shop in shop space at department store Saks Fifth Avenue at the centre. But its decision means other luxury names are breaking free of Bal for Aventura too.
Matthew Whitman Lazenby, president and chief executive of Whitman Family Development, says his shoppers love its safe and secure environment and gross sales are up 10% in the past two years.
While the Design District is still situated in a largely unproven area and security is tight at the shops that have opened so far - late night shopping is deemed too risky amid concerns about the surrounding neighbourhoods.
Adding to the mix of luxury shopping developments is a $1.5bn development in downtown Miami which will include 520,000 square feet of shops and restaurants by Swire Properties, Whitman and Simon Properties which will go head to head with Forbes and Taubman and Centers' Miami Worldcenter in Brickell.
But Miami is a hotspot for tourists from across the US as well as South America – particularly Brazil and Colombia. If the tourists keep coming, there could be room for all three.