Chanel rents space vacated by Victoria’s Secret, Forever 21 in Hong Kong’s Causeway Bay in boost to shopping district
- Local media reports say French luxury fashion house Chanel will pay more than HK$3 million (US$382,810) per month for the about 19,000 sq ft space
- Chanel’s lease will ‘definitely boost the market, especially Causeway Bay’, Bridgeway Prime Shop Fund Management CEO says
Chanel has leased some of the retail space previously occupied by Victoria’s Secret and Forever 21 in Hong Kong’s Causeway Bay, in what could be the city’s biggest such deal since the start of the coronavirus pandemic in 2020.
The French luxury fashion house has leased the ground and first floors, as well as the façade from the ground floor to the fourth floor, in Capitol Centre for three years, according to official records. The records do not mention the rent, but local media Ming Pao and HK01 reported that Chanel will pay more than HK$3 million (US$382,810) per month for the about 19,000 sq ft space, or more than HK$108 million for the three years.
The lease starts on May 16 with two options for renewals of three years each. Renovation work is under way at the site and when the store opens, it will be Chanel’s fifth outlet in Causeway Bay after shops in the Times Square and Lee Garden Two shopping centres, a cosmetics counter in the Sogo department store and a cosmetics and perfume shop in Hysan Place.
A Chanel spokeswoman confirmed that the space will be occupied by Chanel Beauté, the fashion house’s cosmetics brand. Capitol Centre’s leasing office declined to comment.
Chanel’s lease will “definitely boost the market, especially Causeway Bay”, said Edwin Lee, founder and CEO of Bridgeway Prime Shop Fund Management.
“In the current return to normalcy, Causeway Bay is a laggard,” Lee said, noting that Tsim Sha Tsui (TST) and Mong Kok have bounced back faster from the affects of Covid-19 disruptions.
“But, now [Chanel] has suddenly rented a space of HK$3 million to HK$4 million,” he said.
The new store opening comes as the number of tourist arrivals in Hong Kong continues to rise. Tourism and retail sales had shrunk following social unrest in the city in 2019, before the pandemic took its toll. Causeway Bay, once home to the most expensive shopping strip in the world, has seen the likes of Prada, Louis Vuitton and Burberry choosing not to renew their leases as recently as November 2021.
After the city abandoned its social-distancing measures and fully reopened its borders earlier this year, tourist arrivals have jumped, said Rickey Chan, managing director of local property agency Dorbo Realty.
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Demand for luxury goods, watches, jewellery and fashion has increased after the reopening of the border, and with current shop rents at 30 per cent of a peak in 2010 to 2014, many tenants will rent shops before a full-scale rebound in the market, Chan said.
Shop rents in core areas such as Causeway Bay, TST, Mong Kok and Central have rebounded by 5 to 10 per cent on average in the first half of this year, Chan added, and will rise by a further 5 to 10 per cent in the second half.
Both Chan and Bridgeway’s Lee said Chanel’s lease would be Hong Kong’s biggest since the outbreak of Covid-19.
The return of “super tier-one brands” to Causeway Bay will definitely drive up sentiment in the entire district, Lee said. “This year, rent [growth] will surpass that of prices,” he said.
Shop rents in core shopping districts could jump by 20 to 30 per cent this year amid peaking US interest rates, Hong Kong’s economy returning to normalcy and the return of tourists, Lee added.
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The space in Capitol Centre has been empty since Victoria’s Secret closed its store prematurely in June 2020. The US lingerie brand had signed a 10-year lease for five floors totalling 50,000 sq ft in 2017 for an estimated HK$7 million a month.
Victoria’s Secret’s lease was about 50 per cent lower than what the previous tenant – US fashion brand Forever 21 – paid for the space.
