A French hair accessories luxury brand has agreed to pay HK$1,200 per square foot a month when its lease comes up for renewal at the high-end IFC Mall in Central, setting a record for the shopping arcade in the core business district.
Under the new lease, Alexandre Zouari Paris will pay a monthly rent of HK$480,000 for its 400 square foot shop at the mall, owned by a consortium led by Sun Hung Kai Properties. The accessories brand has been operating on the first level of the mall for more than six years.
"It is a record for the mall," said Karim Azar, general manager for retail leasing at International Finance Centre Management, which handles the mall's leases. The French brand broke the previous record set late last year by a cosmetics retailer with its HK$1,000 per square foot a month.
Joe Lin, senior director of retail services at CBRE, said he believed the high-rent deals being cut by IFC were not only a record for Central but are also close to the levels commanded by shopping centres in Causeway Bay, the city's most expensive retail district. "The mall's rent still has potential to grow because of limited supply in Central. IFC is also popular among tai-tais because of its parking spaces and easy accessibility," he said.
The IFC complex, which comprises the mall, two office towers and a Four Seasons hotel, has 1,340 parking spaces. With growing demand for retail space, Palace IFC Cinema and restaurants have been forced to downsize or be edged out by luxury brands. The mall has raised rents by up to 40 per cent as leases come up for renewal this year. In line with Sun Hung Kai Properties' plan to revamp the trade mix of its joint-venture retail arcade, Palace IFC Cinema - which opened in the mall 10 years ago - will reduce its size by 3,500 sq ft to 11,500 sq ft following a recent lease renewal.
"Given the cinema is located adjacent to the most expensive shop, Alexandre Zouari Paris, we will divide the additional 3,500 sq ft into four retail shops. It will attract more shoppers here once we increase the number of proper retail shops," Azar said. Illustrating the cash-flow appeal of high-end stores, Alexandre Zouari Paris' product range includes women's hair brushes costing more than HK$400.
To make way for more retail shops, Azar said the mall planned to reduce the number of restaurants from 41 in 2005 to 27 by the end of this year. Among those that will have to leave shortly are G Bar and fashionable dining restaurant H One on the fourth level, both of which have been at IFC since 2005.
Lane Crawford, which offers the largest assortment of luxury brands in the region, will take over the 10,000 sq ft vacated by these two outlets. It currently leases 82,000 sq ft at the mall.
Lin expects restaurants to move to buildings in Wellington Street and Stanley Street that offer rents of about HK$30 per square foot. "Cinemas will gradually retreat to shopping malls located in the secondary locations such as Tseung Kwan O as they can hardly compete with luxury brands that have the ability to pay big bucks for prime locations," Lin said.
Azar said IFC Mall recorded total sales of more than HK$10 billion last year, up 15 per cent from the previous year. "We have a long waiting list of potential tenants wanting to move in. So, we will not renew those tenants whose sales have been underperforming," he said.