Hermes to swap Galleria location for Prince’s Building flagship store in 2018
Designer will lease a 10,000 sq ft location, seeking a buyer for its Galleria space
Hermes is poised to open a flagship store occupying 10,000 square feet in Hong Kong in early 2018, switching strategy from owning its retail space to renting to help it weather the city’s slump in luxury and retail sales.
The French designer of luxury totes and leather products will move to the Prince’s Building along Des Voeux Road in Central, from its current location a block away at The Galleria on Queen’s Road, according to real estate agents who declined to be identified.
Existing tenants at Prince’s, including Alfred Dunhill, Brooks Brothers and a salon called ii hair & nail, will make way for Hermes, they said.
The new location will be almost double the size of Hermes’ current shop at The Galleria, developed by Hongkong Land Holdings Ltd.
Dunhill has already relocated from its two-storey outlet at Prince’s Building to another spot in the same building, while Brooks Brothers will move out from its current lot next to Dunhill’s to make room for Hermes, the agents said. Hermes will also replace ii hair & nail, which leases a basement shop at Prince’s Building covering an area of about 6,000 square feet.
Hermes will take over the lease for the combined space in November, and spend the next year on renovations, scheduling its flagship to open in early 2018, the agents said.
The relocation makes Prince’s Building, also owned by Hongkong Land, the landlord to some of the world’s biggest and most sought-after luxury retailers, including Chanel, Cartier, Ralph Lauren and Van Cleef & Arpels.
Hong Kong’s retail sales fell 8.5 per cent in July compared with a year ago, the 17th consecutive month of declines, as a strong currency deterred tourists, especially mainland Chinese shoppers who used to flock in droves to the city’s luxury outlets and malls.
Sales of jewellery, watches, clocks, wine and other luxury products have been particularly hit, down 29.2 per cent in July, compared with the June decline of 20.7 per cent.
“Luxury sales in Hong Kong had softened and is facing a downturn because of declining mainland Chinese numbers,” said Tom Gaffney, CBRE’s Managing Director for its Hong Kong, Macau and Taiwan offices. “However Hong Kong still remains a key market in the global landscape for luxury retail.”
The relocation may yet turn out to be an astute transaction for Hermes. The company paid HK$190 million in 2002 for its space in The Galleria, and is asking for HK$1.5 billion to sell it. It will lease to occupy a larger space a block away while its looks for buyers for its Galleria space, agents said.
“This is part of many of the major luxury retail group’s long-term strategic planning,” Gaffney said. “They are optimistic about the long-term future of Hong Kong and as the key gateway for Greater China. Hong Kong is still the centre of luxury for many brands’ and the home to their global flagship stores.”