Burberry's move into Admiralty's Pacific Place has set off a chain reaction: bigger businesses are ousting smaller ones, possibly forcing rent rises.
At the top of the chain is the British luxury brand. Its relocation affects several stores at three malls.
At Pacific Place, Burberry will move into the space now occupied by Lane Crawford - taking up 21,000 sq ft over two floors - later this year.
Lane Crawford this month will move into neighbouring Queensway Plaza, sending shockwaves through the government-owned shopping centre. The store is forcing out small businesses and taking up most of the one-storey shop spaces.
Jewellery store Sanaco has occupied its 1,000 sq ft space in Queensway Plaza for 30 years.
Store owner Takeshi Otsuka found out officially from Hang Lung Properties only in September that his business would have to vacate by the end of December. He moved into a 700 sq ft space in nearby Admiralty Centre, where shop space is owned by individual tenants.
But he is paying one of the highest rents in the mall, only 15 per cent less than what he was paying in Queensway Plaza.
Otsuka is convinced this is the start of higher rents in the less-upscale Admiralty Centre.
'Once tenants see that a business like mine is willing to pay this much, then others will raise their rents too,' he said. 'The smaller businesses will get pushed out - it's a chain reaction.'
Margaret Kwok Mo-ching, who has been running an office supplies store in Admiralty Centre since 1988, said that despite the rising prices, she was not worried.
'I've developed a long-standing relationship with my landlord for the past two decades, so even if another business offers to pay slightly more, they will stick with me,' she said. 'But if the offer is a lot higher than what I'm paying, then I'm not so sure.'
Otsuka said he wished the government or property company had told the Queensway Plaza tenants earlier that Lane Crawford would be taking up their shop space.
'We read in the papers that Lane Crawford would be moving in, but Hang Lung still did not tell us until September - leaving only three months for tenants to find a new location. That can kill small businesses,' he said.
Otsuka said that since the move his business had remained steady because of long-term customers, but foot traffic had dropped significantly.
Btu he does see an upside to the trickle-down effect.
'In the long run, Lane Crawford might turn Queensway Plaza into a more upscale mall, which in turn will make Admiralty Centre classier too,' he said.
As for Burberry, Otsuka said: 'Pacific Place is not the shopping destination that most tourists think of, but bringing Burberry in will make the mall more popular - especially for mainland tourists.'