French luxury retailer Chanel SA is paying a record price for retail space in Los Angeles as prime shopping locations in the nation’s major urban areas command rising premiums.
Chanel is purchasing the 11,500-square-foot building at 400 North Rodeo Drive in Beverly Hills for $152 million, or more than $13,000 a square foot, according to people involved in the transaction. That tops the previous high for Southern California of about $10,400 a square foot, set in 2012, for another building on North Rodeo Drive, according to data provided by real-estate firm Real Capital Analytics.
The deal is another sign of the strong interest among retailers and landlords in retail real estate in large urban areas with a dense population of affluent shoppers.
“That’s what people have been willing to pay up for,” said Jim Costello, senior vice president at Real Capital Analytics. “That’s where the millennials are. That’s where the consumers are.”
Buyers have been willing to pay particularly high prices for the most desirable and heavily trafficked destinations where luxury brands can command attention, such as Madison Avenue in New York.
“It’s like buying a very expensive billboard,” said Scott Kalt, a founding partner at Elkins Kalt Weintraub Reuben Gartside LLP, a Los Angeles law firm that represented one of two families in the partnership that sold the property to Chanel.
Chanel, for example, paid more than $31,000 a square foot last year for retail space on Madison Avenue at 64th Street, which is the highest price for any retail space in the nation, according to Real Capital Analytics.
Three other sales in Manhattan this year have topped $14,000 a square foot, the firm’s data show. Prices in the top quartile of sales of retail space have often topped the prerecession peaks in many cities in recent years, according to the firm’s figures, though prices have also fluctuated in some places.
North Rodeo Drive is home to a wide range of luxury retailers, including Cartier, Gucci and Prada. Chanel has rented the property on the corner of Brighton Way for years, according to people familiar with the matter.
“If it’s not the single best corner in Beverly Hills, anyone would list it in the top two or three,” said Ron Goldie, a Los Angeles-area attorney who also worked with one of the families selling the property. “It’s highly visible.”