Swire Properties will replace 'staid' British store with trendy Spanish fashion retailer Zara and others
British-based Marks & Spencer is to close its flagship store in the biggest shopping mall in Admiralty, and property-market observers believe the staid image of the retailer does not meet the landlord's requirement for trendy tenants.
After operating the store in Pacific Place for about 15 years, M&S said it would close in June because landlord Swire Properties did not renew its lease.
The space, over two floors, will be occupied by Spanish fashion retailer Zara and a number of other brands.
Richard Wolff, divisional director of Marks & Spencer, said the company was disappointed because the closure would inconvenience its customers.
Mr Wolff said the company would be happy to stay and pay higher rent. The Pacific Place outlet was one of the best performers of nine in Hong Kong, he said.
However, Swire Properties wanted to divide the 24,000 sq ft store into four smaller units to house more tenants, according to Mr Wolff.
He said Swire Properties had not offered the company an option of taking a smaller space.
But even if the landlord had made an offer, downsizing would not fit the company's development strategy, and too small a shop would not house its product range.
Swire Properties director Jolyon Culbertson confirmed that Zara would take over about 12,000 sq ft on the ground floor, and a number of other brands would take the rest.
Zara was unavailable for comment yesterday.
The Pacific Place outlet will be the Spanish retailer's second store in Hong Kong, after a 15,000 sq ft unit opened at IFC Mall in Central.
Joe Lin Chi-ho, director of retail services at CB Richard Ellis' Hong Kong office, said the image of Marks & Spencer did not suit the mall's tenant mix. 'The store did not make any major change for the past 15 years,' Mr Lin said. The products being sold and the layout of the shop had varied little over the years, he said.
Tenant switches by landlords are also prompted by economic recovery.
'As the economy picks up, retailers show strong demand for quality shopping malls. That encourages landlords to change the tenant mix,' Mr Lin said.
Landlords also hoped a change in tenant mix would be a stimulus to draw shoppers.
With competition for shoppers in Hong Kong particularly keen, landlords were eager to improve the variety of products in malls. But this would not happen when the economy was bad because landlords relied on big tenants to secure rents, he said.
A Swire Properties spokeswoman said yesterday the change in tenant mix was normal practice and was carried out not only in answer to existing customers' demands but also in anticipation of future demand.