By Larry Schlesinger, 29 July 2015
The Paris-end of Collins Street, Melbourne's premier luxury retailing destination, could face an exodus of top brands because of the enormous rents landlords are charging for retail space, one prominent retailer, who is quitting the strip, says.
James Kennedy, chief executive of family-run luxury retailing business Emerald Group Investments, said the company was not renewing its lease at 179 Collins Street, where it has a Bang & Olufsen store.
EGI took over the Collins Street lease in May, when it acquired the Australian and New Zealand retail operations of the Danish audio-visual retailer. It also owns LK Boutique, famous for its luxury watches, and the Rolex Boutique on Martin Place in Sydney.
"We are moving off Collins Street and on to Flinders Lane. We are getting double the space for half the price," Mr Kennedy said.
"We don't need Collins Street. Our brand carries enough weight. Luxury brands do not need to pay these exorbitant rentals."
Other retailers could adopt a similar strategy, Mr Kennedy said, which would have an impact on Collins Street's reputation as a luxury strip and put it at risk of becoming a version of Sydney's less-chic Pitt Street Mall.
CBRE's head of Melbourne retail leasing Zelman Ainsworth said rents at the premium end of Collins Street averaged between $4500 and $5500 a square metre, while just a block down on Flinders Lane they were less than $2000 a square metre.
High rents, but also a lack of vacancies, were driving brands like BOSE, Valentino, Rag & Bone, Roberto Cavalli, Carolina Herrera and others to look at opening stores on Flinders Lane, Mr Ainsworth said.
They would join French fashion house Chanel, which opened its flagship store in the former Church of Scientology building at 140 Flinders Lane in October 2013, popular restaurants like Chin Chin, Cumulus, Tonka Bar and Coda, and many fashion boutiques, which are all on Flinders Lane.
In 2014 hospitality operator Sand Hill Road struck a $1 million-a-year lease deal with the Zagame Group at 101 Flinders Lane, with plans to resurrect the former premises of famed Melbourne eatery Rosati.
"We are noticing more luxury retailers are looking around Flinders Lane between Russell Street and Exhibition Street to secure their Melbourne flagship stores," Mr Ainsworth said.
"Off the back of the success Chanel has been achieving on the corner of Russell and Flinders Lane, it is giving more confidence to the international retail market to move slightly off Collins Street.
"This pocket of Flinders Lane is supported by a number of five-star hotels, Australia's best hospitality precinct, multiple A-grade office towers and is only metres from the luxury end of Collins Street."