INSIDE OUT The Paris retail market: change is in the air - Knight Frank
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01
RETAIL
INSIDE OUT
The Paris retail market:
change is in the air
What is the outlook for Paris’s main shopping
districts?
2
CONTACT
David Bourla
Chief Economist
+33 (0)1 43 16 55 75
david.bourla@fr.knightfrank.com
© Knight Frank SNC 2017
Knight Frank Commercial Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding
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Knight Frank Research Reports are also available at KnightFrank.fr.
This report is published for general information only. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this
report, no legal responsibility can be accepted by Knight Frank Commercial Research or Knight Frank SNC for any loss or damage resulting from the contents of this document. As
a general report, this material does not necessarily represent the view of Knight Frank SNC in relation to particular properties or projects. Reproduction of this report in whole or in
part is allowed with proper reference to Knight Frank Commercial Research.
Knight Frank SNC is the French branch of Knight Frank LLP. Knight Frank LLP is a limited liability partnership registered in England.
RETAIL
INSIDE OUT
3
THE PARIS RETAIL MARKET:
CHANGE IS IN THE AIR
What is the outlook for Paris’s main shopping
districts?
Foreign tourists are back, economic growth is accelerating, and Paris
will be hosting the 2024 Olympic Games. After the terrorist attacks of
2015, the city of Paris seems to have transformed from a state of shock
to a state of grace. The city’s retail market has undergone profound
change, aided by the creation of international tourist zones, the
extension of Sunday openings, and high-profile projects such as the
Marché Saint-Germain and the new Forum des Halles. And that is only
the beginning. Creations and refurbishment of retail outlets, openings of
Antoine Grignon flagships, arrivals of new players... Other projects will be launched soon,
Head of Retail Services
to the extent that the months between now and the early 2020s could
be an important step in the history of the Paris retail market.
Aside from political and economic change – often difficult to forecast
– other factors more or less directly linked to retail may prove to
be decisive. The expected growth in international tourism, the
openings and refurbishments of luxury hotels, and the development
of ambitious urban and cultural projects will also play a role,
assuring Paris’s success on the global stage in a regulatory context that
provides greater stability and clarity for international retailers.
While the hierarchy of prime Paris high streets will probably not be
Antoine Salmon
shaken up, the outlook for each shopping district suggests that
Head of Retail Leasing
change is on the horizon. Some streets will consolidate their positions,
while others may develop significantly – so much so that the various
shopping districts of the French capital will be more clearly
connected, resulting in a Paris retail market that is denser and more
consistent.
4
OUTLOOK GOOD FOR
THE PARIS RETAIL MARKET
Domestic consumption rose considerably in 2016, with Development in tourism revenue in the Paris region
household spending up 1.8% from a year earlier. This H1 2017 vs. H1 2016
acceleration is expected to slow in 2017 and beyond
(+1.3%, and +1.5% in both 2018 and 2019) because of
higher inflation and lower purchasing power. However,
the outlook for the retail market is clearer than it
was just a few months ago. The election of Emmanuel
€ +€1.1 billion
in tourism consumption
Macron and a pro-European majority has reassured the
business community. This change in the executive power
has coincided with a significant improvement in consumer Total international tourists
confidence, which in June reached its highest point since
2007, although it has since weakened. Other indicators
too have become positive, proof that rising economic +€168 million
activity is beginning to help the job market. But while the
economic improvement in France is far from negligible,
the momentum of the Paris market and its prime shopping +€88 million
districts depends on much more than just French retailers
and local customers. International visitor numbers and
the strategies employed by large brands aiming for +€47 million
access to an exceptionally beautiful global showcase
also play a vital role.
+€45 million
A LARGE POOL OF TOURISTS
The recovery of tourism is no doubt one of the factors that +€45 million
will have the greatest impact on Paris’s major shopping
districts. After two years of decline following the terrorist ...
attacks (decline of 12% in overnight stays by foreign visitors
in Paris in 2016), activity has picked up significantly – so
much so that the first half of 2017 was the best in a +€837 million
decade. Except for a decline in a few tourist groups such
Total French tourists
as the British, whose purchasing power has weakened
along with their currency, most other nationalities have
experienced a significant rise in visitor numbers. This is the
case for the Americans and Germans (+20% in overnight
stays year on year). The Paris market has also benefitted
from the return of Japanese tourists (+41%) and their
fondness for luxury goods. In addition, Chinese tourists are +€224 million
once again on the rise (+30%) after a temporary decline
in 2016, confirmation of their position as the largest non-
European tourist group after the Americans. Source: Summer report for tourism activity in Paris
Île-de-France, Paris region tourism board.
RETAIL
INSIDE OUT
5
The recovery of the tourism market is expected to extend International tourist arrivals
beyond 2017. Like other large cities, Paris will benefit Current trend and forecast 1980-2030
from the strong growth in global tourism. A UNWTO Million
study estimates annual growth of 3.3% in the number of 2,000
international tourist arrivals worldwide between 2010 and
1,800
2030, or +43 million arrivals per year during the period,
compared with +28 million per year between 1995 and 1,600
2010. In all, there will be 1.3 billion tourist arrivals in 2020 1,400
and 1.8 billion in 2030, compared with ‘merely’ 940 million
1,200
in 2010. Unsurprisingly it is the emerging regions that will
see the largest growth (+5% per year in Africa and 1,000
Asia-Pacific during the period 2010–2030). Mature markets
800
will also benefit, with growth of nearly 2% per year in
western Europe, where the number of international tourist 600
arrivals will rise from 154 million in 2010 to 222 million 400
in 2030. Paris – like London, a key European destination
200
for foreign tourists – will reap some of the benefits of this
growth. The economic potential is all the greater given that 0
France, with $42.5 billion in international tourism receipts 1980 1995 2010 2020F 2030F
in 2016, came in well behind the USA ($206 billion), Spain Africa
($60 billion) and Thailand ($50 billion). Middle East
Americas
International tourism growth is at the forefront of challenges Asia and Pacific
faced by the city of Paris. In its outline for tourism Europe
development, the city of Paris has created more than sixty
‘action plans’ designed to further enhance Paris’s position Source: UNWTO, Tourism highlights 2017 edition.
as the world’s leading tourist city by 2022. Among the
actions are ‘hosting at least one major international event
per year’, the creation of ‘showcases for Paris gastronomy’,
the ‘implementation of a security plan for tourists’, and
the creation of 12,000 additional rooms by 2020 to ensure
adequate ‘high quality and diversified accommodations for
all budgets and types of clients’.
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Future projects / refurbishment Sèvres
Lecourbe
Notre-Dame-des-Champs
Luxembourg Source: Knight Frank, APUR
Gare de
Commerce Lyon
Falguière
Place
Monge
Montparnasse
Félix Faure Pasteur -Bienvenüe Gare
Recent projects Volontaires Edgar
Valvin
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Censier
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1 Royal Monceau Raffles Vaugirard
8 Fouquet's Barrière Port-Royal
15 Lutétia Saint
Marcel
37 avenue Hoche - Paris 8
Lourmel 46 avenue George V - Paris 8 Gaité
Raspail
45 boulevard Raspail - Paris 6
Creation: 1928 Creation: 2006 Creation: 1910 Quai de
Convention
Balard
Refurbishment: 2010 Refurbishment: 2017 Refurbishment: 2018 Les Gobelins
la Gare
Prince de Galles Ritz Costes
Campo-Formio
2 9 16 chevaleret
33 avenue George V - Paris 8 15 place Vendôme - Paris 1 Pernety
Denfert-Rochereau
239-241 rue Saint-Honoré - Paris 1
Creation: 1928 Creation: 1898 Saint-Jacques Creation: 1995 Nationale
Porte de
Refurbishment: 2013 Versailles Refurbishment: 2016 Extension: 2018
Plaisance Mouton Place d’Italie
Duvernet Glacière
3 Four Seasons George V 10 Park Hyatt Vendôme
31 avenue George V - Paris 8 5 rue de la Paix - Paris 2
Corvisard bib
Hôtel Fauchon
François
Creation: 1928 Creation: 2002 17
Alésia 11 place de la Madeleine - Paris 8
Refurbishment: 2013 Porte
Extension: 2007
Corentin
Celton
de Vanves
Creation: 2018 Olympiades
4 Plaza Athénée Tolbiac
25 avenue Montaigne - Paris 8 18 Cheval Blanc Samaritaine
11 The Peninsula Paris 2 quai du Louvre - Paris 1
Mairie d’Issy Creation: 1913 19 avenue Kléber - Paris 16
Refurbishment: 2014 Porte Creation: 2018
Malakoff
Plateau de Vanves
Creation: 2014 d’Orléans
Maison
Bristol 19 Kimpton Blanche
5 12 Mandarin Oriental Porte d’Ivry
112 rue du Faubourg Saint-Honoré Cité
29 boulevard des Capucines - Paris 2
251 rue Saint-Honoré - Paris 1 Universitaire
Paris 8 Creation: 2020 Porte de
Creation: 2011 Porte
Choisy
Creation: 1925 d’Italie
20 Poste du Louvre
Refurbishment: 2009-2012 Shangri-La
13 48 rue du Louvre - Paris 1
Hôtel de Crillon 10 avenue d’Iéna - Paris 16 Creation: 2019
6 Malakoff Creation: 2010
10 place de la Concorde - Paris 8 Rue Etienne Dolet
21 Autograph Collection
Creation: 1909 La Réserve
14 37 rue de Bellechasse - Paris 7
Refurbishment: 2017 42 avenue Gabriel - Paris 8 Creation: 2018
Le Meurice Creation: 2015
7 So Sofitel
228 rue de Rivoli - Paris 1 22
Creation: 1835 144 avenue des Champs-Élysées - Paris 8
Refurbishment: 2007 Creation: 2021
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7
A LARGER SUPPLY OF HIGH-END While luxury hotel openings do not always have a
ACCOMODATIONS direct impact on the retail market, the knock-on effects
are sometimes significant. For example, the Mandarin
The upmarket trend in Paris hotel accommodations
Oriental, created in 2011, has directly contributed to the
has accelerated since 2010. Among the contributing
upmarket trend of the rue Saint-Honoré, now Paris’s
factors are the determination of both long-established
most dynamic high street. Rue Saint-Honoré was the site
and more recent hotel operators to capitalize on Paris’s
of 18% of all luxury openings in Paris during the period
growth potential, the overdue refurbishment of hotels
2012–2017, ahead of avenue Montaigne (12%) and rue du
in order to meet the needs of an international clientele,
Faubourg Saint-Honoré (12%). The opposite is true for the
competition from other European destinations, and the
sector Sèvres/Grenelle/Saint-Germain. The closing of the
boom of new types of accommodation (e.g. Airbnb). In
Lutétia for remodelling since 2014 has coincided with an
addition, the reorganization of the hotel classification
unequivocal slowdown in upscale retail openings after an
system (implemented by law of 22 July 2009) resulted in the
exceptionally lively period 2010–2014 (Hermès and Ralph
creation of the ‘five star’ category including the distinction
Lauren in 2010, Céline in 2011, Louis Vuitton in 2012,
of ‘Palace’, which ‘must contribute to the dissemination
Berluti in 2013, etc.).
of French culture and to the appeal of France as a
destination’. Desire for this new rating prompted numerous
long-established hotels to undertake major refurbishment A LARGE POOL OF NEW RETAILERS
and renovation work.
The arrival on the Paris hotel scene of new operators
is a clear sign of the city’s attractiveness. The arrival of
‘Our vision: In 2022, Paris will be not new foreign retailers is also a good indicator of the retail
only the most visited city in the world, market’s solid health. However, though Paris remains one
but also the most welcoming one, of the world’s major destinations, the number of foreign
newcomers has slowed significantly since the heavyweight
thanks to high quality, sustainable
arrivals at the end of the 2000s and beginning of the
tourism which creates jobs and
2010s (Uniqlo in 2007, Apple in 2009, Calzedonia in 2010,
enhances the city’s international Abercrombie & Fitch in 2011, etc.). While a few large players
image.’ have arrived since (Five Guys in 2016 on the
Source: Tourism Strategy 2022, Outline for Tourism Development in Paris, Champs-Élysées), several have closed their flagships, such
October 2016.
as Virgin and, more recently, Marks & Spencer and Banana
Republic on the Champs-Élysées.
With regard to the luxury hotel market, the number of These closings are in no way a sign of decline in the
hotel rooms in Paris has risen by more than 50% since attractiveness of Paris’s prime shopping districts. Rather,
the beginning of the 2000s. This growth is attributable they are the consequence of problems specific to retailers,
to the arrival of newcomers (the Shangri-La in 2010, the and reflect a more fundamental change in the retail market:
Mandarin Oriental in 2011, the Peninsula in 2014) and to numerous retailers are revising their expansion strategy
the refurbishment and extension of historic hotels (the in order to adapt their networks of stores to new ways
Ritz, the Crillon and Le Fouquet’s Barrière, following the of shopping and to the growth of e-commerce. This has
Bristol, the Prince de Galles and the Plaza Athénée). There led to a heightened rate of closings and openings among
is no shortage of projects slated for completion by retailers, a significant trend in the retail market which
the beginning of the 2020s. The initial wave will include affects not only secondary locations but also prime ones.
the first-ever Hôtel Fauchon, place de la Madeleine; the This change does not call into question the need for
extension of the Hôtel Costes, rue Saint-Honoré; the retailers to have large flagship stores. To the contrary,
Lutétia; the grand opening of the Cheval Blanc Samaritaine; the greater number of disposals on some of the best
and the first Marriott ‘Autograph Collection’ hotel, in the high streets gives retailers the opportunity to enter or
former Penthemont Abbey (7th). A subsequent wave will expand more easily and quickly in the French market.
include openings of the Kimpton (boulevard des Capucines) The flagship model is still going strong. It remains essential
and the Elegancia in the soon to be redeveloped La Poste for the brick-and-mortar growth of large retailers, while they
du Louvre building. Finally, the Accor Group has plans for simultaneously expand their footprint on the internet.
development of a five-star ‘So Sofitel’ on the
Champs-Élysées by 2021.
8
RETAIL
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9
Retailer demand for the most desirable locations in A MORE ADVANTAGEOUS REGULATORY
Paris will always be high – now more than ever, as CONTEXT
newcomers and new types of retailers begin to enter the
Data from the Ministry of the Economy in early 2017 show a
French market. Proof is easily seen in large cities in Europe
significant increase in Sunday openings in most Paris ITZs.
and worldwide, where retailers are expanding rapidly. Those
The entry into force of the Macron law is clearly a new asset
same retailers are still absent from the Paris market. Among
for Paris, which is in fierce competition with other European
the highest-profile openings recently have been Arkett
cities to attract foreign tourists. After a long period of
(the latest brand from the H&M Group) in London, Munich,
uncertainty, Paris now provides large international
Brussels and Copenhagen. Also in London, Reserved
groups a more stable and understandable regulatory
has opened on Oxford Street, and Canada Goose on
framework.
Regent Street. In Amsterdam, Under Armour has opened
its first flagship in Europe. In addition to these openings, In recent months, new agreements have been concluded
lesser-known retailers from emerging countries – often the within large groups and by various branches, particularly
sources of significant numbers of tourists – have arrived. fashion retailers. Department stores now have the right
For example, Line Friends has opened its first store outside to stay open 7/7. This has been the case for Galeries
of Asia, in New York on Times Square. To varying degrees, Lafayette Haussmann and Bon Marché since January
industrial groups and pure players (e.g. Microsoft, Amazon, 2017, for Printemps Haussmann since June 2017, and
Smeg, Sonos) have also entered brick-and-mortar retail. for BHV (the first to open on Sundays) since July 2016.
The additional opening time has had a positive effect on
business. For BHV, Sunday openings have resulted in 10%
growth in annual sales, and they have boosted other retail
activity in the immediate neighbourhood.
Change in Sunday opening rates in various Paris neighbourhoods
ITZ September 2016 January 2017
Le Marais 48% 71%
Les Halles 27% 48%
Rennes - Saint-Sulpice < 10% 14%
Saint-Honoré - Vendôme < 10% 16%
Saint-Germain < 10% 18%
Average of Paris ITZs 21% 27%
Source: Observations on retail in International Tourist Zones, Direction générale des Entreprises, 2017.
10
Timeline of retail projects in Paris since the 1970s
1970
1976 Italie 2 / Galerie Gaîté-Montparnasse
1979 Forum des Halles / Beaugrenelle
1980
Forum des Halles (extension) 1986
1990
1991 Les Trois Quartiers
Passy Plaza / Carrousel du Louvre 1993
1997 Passage du Havre
Bercy Village 1998
2000 2000 Citadium Caumartin
Gare du Nord 2002
2004 Galerie Lafayette Maison
2007 Gare de l’Est
2010
2012 Gare Saint-Lazare / Gare de Lyon
Beaugrenelle (extension-redevelopment) 2013
2014 Galeries Lafayette Maison & Gourmet (refurbishment)
Le Printemps Carrousel du Louvre
Halle Secrétan 2015 2015 Le Bon Marché (refurbishment-extension)
BHV Marais (refurbishment)
Galeries Lafayette Haussmann 2016 2016 Marché Saint-Germain (redevelopment)
(Shopping & Welcome Centre) Forum des Halles (extension-redevelopment)
Vill’Up / Former Macdonald warehouse
Printemps Haussmann (refurbishment) 2017
La Grande Épicerie de Paris (rue de Passy)
Shopping centres
Retail developments in train stations
Department sores
Source: Knight FrankRETAIL
INSIDE OUT
11
A NEW MILESTONE IN THE HISTORY OF
PARIS RETAILING
After an intense 2016 and 2017 (e.g. the redevelopment of Several secondary zones have developed as new Paris
the Marché Saint-Germain and the refurbishment-extension neighbourhoods have been created. The Rive Gauche
of the Forum des Halles), the grand openings of new retail ZAC (designated development zone) has seen more than
projects are not expected to decline. The end of the 2010s 50,000 sq. m of retailers and restaurants opened since
into the early 2020s could mark an important new stage the end of the 1990s (Décathlon, H&M, Prêt à Manger,
in the history of Paris retailing. etc.). In the north-eastern part of Paris, 30,000 sq. m have
been opened in the former Macdonald warehouse (Leroy-
A few milestones in this history are described below. Their
Merlin, Leclerc, Décathlon, etc.). In 2016, the 24,000 sq. m
influence is still felt in retailing activity and customer flows
shopping centre Vill’Up opened in La Villette. Other projects
in Paris. An historical overview places future Paris retail
will be finalised in the years to come. More than 20,000
projects in a long-term framework, and reflects how Paris
sq. m of retail and leisure space will be made available by
retail constantly adapts to changes in distribution and
the Clichy-Batignolles ZAC residential and tertiary offer in
consumer behaviour.
the 17th.
After the opening at the end of the 1970s of Italie 2
There is another trend, first observed at the beginning
and especially the Forum des Halles – which brought to
of the 2000s, which has accentuated since the beginning
fruition one of the grand projects of the Pompidou era – the
of the 2010s and will continue into the early 2020s: retail
1980s were relatively quiet. However, in 1986 the Forum
development in train stations. After the Nord, Est and
des Halles was extended by 12,000 sq. m, and a few
Saint-Lazare train stations, new developments are planned
retailers opened which would change the history of Paris’s
for 2018–2020 in the Montparnasse (19,000 sq. m of
main high streets, such as the Virgin Megastore on the
retail space) and Austerlitz (12,500 sq. m) stations. These
Champs-Élysées in 1988.
projects are representative of the significant growth of retail
The 1990s brought new arcades and shopping centres space. Train stations offer large retailers an opportunity to
to Paris. The Trois Quartiers (1991), the Carrousel du expand their networks and to enjoy the high margins that
Louvre (1993) and the Passy Plaza (1993) were opened first, travel retail provides.
then came the Passage du Havre in 1997. Bercy Village was
opened in 1998, along with the UGC multiplex, bringing
new energy to quiet eastern Paris. Three of these shopping
centres – the Carrousel du Louvre, the Passage du Havre
and Bercy Village – alone account for slightly more than
40 million visitors per year, or as many as Les 4 Temps at
La Défense, Europe’s most-visited shopping centre (with
Westfield Stratford in the United Kingdom).
The growth of Paris retail stock began to slow at the
beginning of the 2000s. Instead, existing space was
redeveloped and upgraded, in order to adapt to new modes
of consumption. The refurbishment of the Forum des
Halles, the redevelopment of Beaugrenelle and the Marché
Saint-Germain, and the 27,000 sq. m of
Gaîté-Montparnasse to be delivered by 2020 all respond to
a dual need to improve supply and to enhance Paris’s
prime shopping districts. Department stores are also part
of this trend. Like the Printemps Haussmann, all department
stores have carried out major renovation and extension
work in order to attract international customers.
For the past few years, the development of Paris retail
stock has been focused on other neighbourhoods.12
Avenue des Champs-Élysées, Paris 8thRETAIL
INSIDE OUT
13
OUTLOOK FOR CHANGE IN PARIS’S MAIN
SHOPPING DISTRICTS
CHAMPS-ÉLYSÉES take shape over such a short period. In addition, while
the valuation gap between the two sides of the Champs-
Change in continuity
Élysées has closed somewhat, values are expected to
After more than 15 transactions made since the beginning remain between 13,000 and 15,000 €/sq. m/year Zone
of 2016, the Champs-Élysées will definitely be getting A(1) for the best locations on the odd side, and to remain
a makeover in the months to come. Several deals and around 20,000 €/sq. m/year on the even side. A few recent
redevelopment projects are already under way: for example, transactions have hiked prices for top slots, but without
2,800 sq. m of retail space at no. 50 (former Gaumont effecting inflation across the board.
cinema) and 1,500 sq. m at no. 123 (former Clément and
Dinh Van). Hotels and cinemas are also planned (So Sofitel,
MK2), allowing the Champs-Élysées, in addition to its retail
function, to retain a mix of tenants and to be a destination
for leisure and entertainment for Parisians and tourists alike. IN SHORT
However, development projects under way and lettings
Prime rental values at Q4 2017
in recent months do not suggest that a retail revolution 15,000–20,000 €/sq. m/year (Zone A)
has arrived on the Champs-Élysées. Rather they reinforce
Next important openings
the avenue’s status as an international showcase. There
Nike, Kiko, L’Occitane, Apple, Galeries Lafayette,
have been several deals for the relocation or expansion of Chanel Beauté, Dior Parfums
flagships already on the Champs-Élysées: Nike in 4,500
sq. m at no. 79, the Adidas expansion at no. 22 (former Redevelopment projects
No. 144-150 (So Sofitel, MK2), no. 50 (former
Banana Republic), the relocations of L’Occitane/Pierre
Gaumont cinema, 2,800 sq. m of retail space),
Hermé Paris to no. 86 (former Promod) and of Weston no. 123 (1,500 sq. m of retail space), no. 118
to no. 55 (former LCL agency). Meanwhile newcomers (departure of Mercedes, 990 sq. m of retail space)
are reinforcing the mid- and high-end positioning of the
Transformation index (scale of 1 to 10)
Champs-Élysées. Five Guys opened at the end of 2016
at no. 49–51, Citadium opened at no. 65 (former Tommy 6
Hilfiger), Kiko will have its largest European flagship at no.
102 and Apple will be at no. 114.
While luxury goods have always been at home on the
Champs-Élysées (from Fouquet’s to the Louis Vuitton
flagship opened in 2005), other deals will up the ante
even further. This trend has been observed since 2013,
with openings and lettings by Tiffany & Co., Dubail,
Tag-Heuer, Chanel Beauté and Dior Parfums, and with
refurbishments carried out by Cartier and Montblanc. The
opening of Galeries Lafayette planned for the first half of
2019 will enhance this change, while the expansion of
several French retailers (Maje, Zadig & Voltaire, Repetto) will
bring a trendier note to the Champs-Élysées.
The level of prime rental values on the
Champs-Élysées is not expected to change
significantly. Retailer demand for a well-located flagship
remains steady and should contribute to the absorption of
rising supply. What is unusual is the unprecedented volume
that will become available if all redevelopment projects
(1)
Rental value: rent + disposal (lease right/goodwill) decapitalized.14
Openings of luxury stores in Paris, by street/shopping district, 2012–2017
Source: Knight Frank
18%
21%
Rue Saint-Honoré
Avenue Montaigne
4%
12% Faubourg Saint-Honoré
6% Place Vendôme / rue de la Paix
Sèvres / Grenelle / Saint-Germain
7% George V / François 1er
12%
Marais
9% Champs-Élysées
11%
OtherRETAIL
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15
THE HEART OF PARIS LUXURY avenue Montaigne). In confirmation of a trend observed
now for many years, Paris’s historic luxury high streets
The rue Saint-Honoré extends its borders will see mainly relocations, refurbishments and
After a growth spurt in the early 2010s, attributable partly to expansions of existing flagships (Dolce & Gabbana on
the boom in Chinese consumption, the global luxury market rue du Faubourg Saint-Honoré and on avenue Montaigne).
contracted in 2016, after the terrorist attacks in Europe, While a few creations ex nihilo of the most prestigious
and because of economic and political difficulties in certain brands will be grouped around prime retail locations, other
emerging countries. In 2017, the luxury market revived, with areas will welcome retailers less known or less exclusive.
sales up 5% year on year (+6% in Europe(2)). This change The Faubourg Saint-Honoré provides the best example.
in momentum was due to Chinese customers, to a rise While the area between the rue Boissy d’Anglas and the
in spending by millennials and to growth in e-commerce rue Royale will remain the principal hunting ground for a
(+24% in 2017, compared with +8% for in-store retail). By small number of large brands, other brands will continue
2020, the luxury market should experience annual growth to search for locations around the Bristol. In this sector,
of between four and five percent. Paris will benefit from where Cifonelli, Baccarat and Thierry Mugler have opened
favourable trends, such as the tendency of major luxury since 2015 and where Christian Liaigre is expected soon,
groups to focus on the largest global markets, to the opportunities are often enhanced by the presence of art
detriment of secondary markets. The consolidation trend galleries in the area. There are also benefits from being near
in established markets will likely also apply to Paris, the Splendide Royal, a five-star hotel which opened a few
where the most prestigious retailers continue to favour months ago in this area close to the Élysée Palace, where
a few streets on the Right Bank which form the historic presidential security measures weigh on retail activity.
heart of Paris luxury.
The rue Saint-Honoré will likely see its new status
confirmed with the arrival of high-profile projects. The
recently opened Louis Vuitton flagship, widely covered by
the media, provides the perfect illustration of the trend for
IN SHORT
luxury groups to focus their efforts on a limited number of Prime rental values at Q4 2017
large, ideally located ‘maisons’. With their artistic cachet, 10,000–15,000 €/sq. m/year (Zone A)
these flagships provide an increasingly sophisticated Next important openings
shopping experience and will increase the street’s Dolce & Gabbana on avenue Montaigne (extension),
attractiveness. The Louis Vuitton flagship reinforces the Chanel on rue Saint-Honoré, Dior on rue Saint-
street’s upmarket trend, which will be further enhanced by Honoré, Saint Laurent on rue Saint-Honoré,
Boucheron at place Vendôme (refurbishment)
the long-awaited opening of Chanel at the corner of rues
Cambon, Duphot and Saint-Honoré, the opening of the Redevelopment projects
Dior flagship, and the arrival of Saint Laurent in the former 26 bis–32 rue François 1er (former Europe 1,
Colette space. The closing of the concept-store will have 1,000 sq. m of retail space), former Canadian
Embassy.
an effect on the street’s identity. While its positioning could
change, the expansion of the Hôtel Costes, for which work Other: extension of Hôtel Costes
is under way, will only enhance the street’s already trendy Transformation index (scale of 1 to 10)
reputation. It is important for the rue Saint-Honoré 5
to retain this trendy image, which distinguishes it
from more exclusive, traditional streets on the Right
Bank. This image could add to its success with younger
customers, generations Y and Z, who are key to future
growth in the luxury market.
The historic heart of the Right Bank (place Vendôme,
rue de la Paix, rue du Faubourg Saint-Honoré, avenue
Montaigne) is expected to be less dynamic. This is true
first because the rue Saint-Honoré enjoys a growing share
in demand from large luxury retailers and has become a
major competitor for nearby streets, such as rue de la Paix.
Second, the opportunities for creations are very rare there,
with newcomers arriving only occasionally (Balenciaga on
(2)
Source: Bain & Company16
SAINT-GERMAIN / grand opening a year ago, the effects on nearby
streets are still difficult to measure. Several midrange
SÈVRES / GRENELLE and upscale retailers have opened in the neighbourhood,
What’s new on the Rive Gauche? including single-brand stores (Le Coq Sportif, Fusalp,
Samsonite), French and international newcomers (Scalpers,
Although still a prime location, the Left Bank’s Golden
Jott) and fast-food chains (Chipotle). Other deals under way
Triangle, comprising parts of boulevard Saint-Germain, rue
(rue Bonaparte, rue Saint-Sulpice, etc.) are not expected to
de Grenelle and rue de Sèvres, is trying to get its second
upset the fundamentals of a sector which, while still sought
wind. The upscale trend has paused since numerous
after by retailers, remains stable.
openings at the beginning of the 2010s (Hermès and
Berluti on rue de Sèvres, Louis Vuitton in Saint-Germain des
Prés, Ralph Lauren on boulevard Saint-Germain and Céline
on rue de Grenelle). Few luxury retailers have moved there
since, except a few exclusive projects such as the Steinway
& Sons showroom at 230 boulevard Saint-Germain.
This absence of movement may indicate that luxury brands
no longer find the neighbourhood attractive, although IN SHORT
many designers and upscale retailers (Vanessa Seward
and Fusalp, boulevard Saint-Germain) continue to move Prime rental values at Q4 2017
3,000–6,000 €/sq. m/year (Zone A)
there. However, the success of Le Bon Marché, now open
7/7 and owned by LVMH, offers proof that luxury goods Next important openings
still have their place in Saint-Germain. Perhaps that is why 165 boulevard Saint-Germain (LVMH, former Infinitif)
the number of luxury shops has declined. By improving Redevelopment projects
its product offer after major renovation work, Le Bon Former site of the Banque de France at 48 boulevard
Marché has moved significantly upscale and now provides Raspail (more than 1,000 sq. m of retail space)
the largest brands with a serious alternative to the best Other: Reopening of the Lutétia, and a new luxury
shopping districts of the Left Bank. Finally, the decline in hotel at 40 rue des Saints-Pères
the number of luxury shop openings has coincided with the Transformation index (scale of 1 to 10)
Lutétia’s closing for renovation. This has further reduced a
3
high-end hotel supply which was already relatively low.
Luxury retailers and hotels go hand in hand, so the
reopening in 2018 of this mythical Left Bank hotel could
have a significant impact on the neighbourhood. The
Lutétia will provide a more contemporary showcase,
one that is likely to meet the tastes of tourists already
familiar with the neighbourhood. Yet it could also attract
long-time clients of Right Bank palaces. Other hotel
projects will enhance the neighbourhood, such as the one
planned at 40 rue des Saints-Pères. In addition, two
long-awaited projects could on their own help revive the
Left Bank luxury market, if they are able to attract strong
brands: the installation at 165 boulevard Saint-Germain of
an LVMH retailer (LVMH bought the building three years
ago); and the letting of the former Banque de France
building at 48 boulevard Raspail.
On a less high-end segment, news in the Left Bank retail
market has been dominated by the reopening of Marché
Saint-Germain, after its redevelopment by Banimmo. This
retail site of 4,600 sq. m has allowed a few international
retailers which had little or no footprint on the Left Bank
to open large stores (Uniqlo, Apple). Since the project’sRETAIL
INSIDE OUT
17
MADELEINE / CAPUCINES far from complete, the area will retain its mixed-use
positioning. This suits a neighbourhood frequented by
The prestige of the Madeleine restored Parisians and international tourists alike. The district is
located a stone’s throw from the principal luxury shopping
districts and the Opéra, and it is here that some retailers
The brief adventure of the Pinacothèque, opened in 2007
achieve some of their best performances.
and closed in early 2016; the abandoned C&A flagship,
opened in 2014 and designed to revive the retailer, but A good example of this diversity is the planned installation
closed after less than three years; the uncertainty around in 2018 of a Leroy-Merlin store at the site of the former
the future of Hédiard and its most famous store... Despite Palacio garage. The DIY’s arrival will complete the area’s
its ideal location, as recently as a few months ago the household goods offer (Darty, Boulanger, Zara Home).
Madeleine was still saddled with a reputation for struggling Similar to the Boulanger store opened in 2015 on boulevard
projects. Today, however, it seems to have recovered and des Capucines, Leroy-Merlin will develop an urban,
now holds all the cards to restore its former prestige. connected concept adapted to the neighbourhood’s active
The Madeleine, which until 2019 will undergo work to residents. The boulevard des Capucines has largely
improve traffic circulation planned by the city as part of its completed its transformation. Along with the arrival of
redevelopment of the city’s seven major places, will initially several mass-market retailers (Five Guys at the former
benefit from the ambitions of Fauchon. The retailer is a site of the Chez Clément restaurant), the upmarket trend
guarantor of the neighbourhood’s identity, which dates observed since the beginning of the 2010s (Bucherer,
back to the nineteenth century. At the end of 2016, the Tag-Heuer, Cartier, Montblanc) does not appear ready to
Fauchon shop reopened after major refurbishment. In 2018 gather speed in the coming years, with the exception of a
it will open its first five-star hotel, at the corner of boulevard new InterContinental hotel – the first Kimpton in France –
Malesherbes. The Madeleine’s speciality of high-end food slated to open in 2020.
retailers will be reinforced by the reopening of Hédiard and
the arrival of Café Pouchkine, which leapt at the opportunity
presented by the departure of Orange. Café Pouchkine can
now attach its name to that of the famous square.
IN SHORT
Prime rental values at Q4 2017
2,500–4,000 €/sq. m/year (Zone A)
Next important openings
Café Pouchkine, letting of 23 boulevard de la
Madeleine (former Madelios and C&A, 6,000 sq. m
of retail space), letting of 28 place de la Madeleine
(former Pinacothèque, 1,500 sq. m of retail space),
Leroy-Merlin, Hédiard (reopening)
Other: Hôtel Fauchon, Hôtel Kimpton, roadwork by the
city of Paris as part of its plan to improve traffic flow
Fauchon, place de la Madeleine, Paris 8th around Paris’s seven major places
Transformation index (scale of 1 to 10)
To add to their footprint in Paris, less-upscale retailers have
taken advantage of the supply of medium-sized and large 6
spaces. A part of the Pinacothèque has been let to Prêt
à Manger (11 rue de Sèze), while another part has gone
to Reebok for a boutique and gym (12 boulevard de la
Madeleine). There remain 1,500 sq. m to let at the former
private museum (28 place de la Madeleine), in addition to
the 6,000 sq. m of the former C&A flagship at 23 boulevard
de la Madeleine. The quality of these locations and the
negotiations under way foreshadow other significant
openings. Although the Madeleine’s transformation is18
LE MARAIS 2020. This growth feeds and sustains the strong demand of
retailers for this shopping district in the heart of Paris, with
The place to be its extraordinary architectural heritage.
As one of Paris’s most popular neighbourhoods, the lively Some streets are more sought after than others. At the
Le Marais is well worth a visit. Its successfully trendy top of the list are rue des Francs-Bourgeois and rue
positioning is hardly new. Years ago a few pioneering Vieille du Temple.
concept stores (L’Eclaireur, Fleux, Home/Bensimon, etc.)
established the area’s reputation as a trendsetter, an The large number of openings in the past two years –
image reinforced in recent years. Despite the occasional Chanel Beauté at no. 40, Petit Bateau at no. 6, Lancel
closing, several major accessible luxury brands (e.g. The at no. 43, Frederic Malle at no. 13 (formerly MAC, which
Kooples, Maje and Zadig & Voltaire) have firmly established has moved to no. 21), Nespresso at no. 29, etc. – provide
themselves in the neighbourhood. Fast-fashion has also sufficient proof of retailer appetite for the rue des
been active (Uniqlo in 2014 on rue des Francs-Bourgeois, Francs-Bourgeois. This appeal should underpin the
after COS on rue des Rosiers and before Weekday and redevelopment of the Hôtel de Coulanges at no. 35–37,
& Other Stories on rue Vieille du Temple). Newcomers a seventeenth-century complex earmarked by the ‘Reinvent
(Scalpers, Hipanema, Supreme), single-brand stores Paris’ competition to become by 2019 a space dedicated
(K-Way, Rains, Petit Bateau) and pop-up stores (Kenzo, to fashion and design, with coworking spaces and designer
Chanel) have also proliferated, a sign of the strategic concept stores.
importance of Le Marais as marketing tool. However, On rue Vieille du Temple the list of openings, both recent
this change is by no means limited to the fashion sector. and to come, is just as long: Labonal at no. 11, Maxime
Le Marais has also become a pilgrimage destination for Simoens at no. 13, Weekday at no. 121 and & Other
aficionados of high-end cosmetics and of the latest food Stories at no. 76/76 bis, Grom at no. 16, Bobbies at no. 79,
concepts. Hipanema at no. 99, etc.). However, the news has been
The next few years will bring a greater variety of dominated recently by the sale of the Hôtel Amelot de
retailers to a neighbourhood expected to remain very Bisseuil at no. 47. While a Chanel pop-up has been there
trendy. Figures published recently by BHV confirm the these past few months (and it is rumoured that it could
soaring internationalization of the Le Marais clientele. If in become permanent), in 2018 this architectural gem will also
2013 foreign tourists accounted for only 6% of sales, today become a luxury hotel with spa and restaurant.
they account for 18%, a figure that could reach 35% by
Rue des Rosiers, Paris 4thRETAIL
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19
Turning to the rue des Archives, the luxury sector moved Marais’ image but without the price tag, the
in with great fanfare in 2014–2015 (Givenchy, Moncler, Haut-Marais has so far seen few large openings. This part
Fendi, Gucci and Valentino), though there have been no of the neighbourhood is home mainly to concept stores,
openings as high-profile since then. The most recent deals pop-up shops and harder edged fashion retailers. However,
have been for less exclusive brands usually confined to a few more or less recent events, such as the refurbishment
the bottom end of the street, near BHV (John Galliano). of the place de la République, the new Carreau du Temple
The ongoing, measured move upmarket is predictable and the ambitious reactivation project of the ‘Jeune Rue’
and limited in its geographic boundaries. The trend will (i.e. the Vertbois project) since its recent purchase by
promote the opening of a new luxury hotel on the corner of Rockspring, could attract the interest of retailers for the
rue de la Verrerie, following the acquisition by Xavier Niel area.
and the Pariente brothers of the Villa Mazarin. The growing
popularity of Le Marais with the young, international crowd,
whose tastes are increasingly diverse and sophisticated, is
also a factor in the upscale trend. The dynamic momentum
of rue des Archives could extend further north – albeit less
upscale – after the redevelopment of the Cœur Marais office
complex and the opening of a WeWork coworking space of IN SHORT
7,000 sq. m. Prime rental values at Q4 2017
The retail geography of Le Marais will not be completely 2,000–4,500 €/sq. m/year (Zone A)
redrawn, but could be changed nonetheless. Rue Next important openings
Sainte-Croix de la Bretonnerie will likely rise in the Eataly, & Other Stories
neighbourhood’s hierarchy of principal shopping Redevelopment projects
streets. Less sought after until the beginning of the 2010s Hôtel de Coulanges, Hôtel Amelot de Bisseuil
because of retailer demand focused on just a handful of
Other: Lafayette Anticipations, Hôtel Evok,
streets (Francs-Bourgeois, Vieille du Temple, Rosiers),
projet Vertbois (former ‘Jeune Rue’ )
the street saw several openings between 2012 and 2015,
such as Diesel and Levis at no. 21 and Casio at no. 5. Transformation index (scale of 1 to 10)
But it was the arrival in 2015 at no. 20 bis of a Nature & 6
Découvertes flagship of 500 sq. m that attracted attention
and unveiled the street’s potential. With a supply of the
kind of opportunities which are now hard to find in other
prime areas of Le Marais, and its proximity to the Le Marais
buzz, the rue Sainte-Croix de la Bretonnerie is set to receive
confirmation for two of the neighbourhood’s most long-
awaited development projects: first, a cultural project to be
opened in 2018 by the Fondation des Galeries Lafayette in
an industrial building on rue du Plâtre, redeveloped by the
famous architect Rem Koolhas; and second, the opening,
by the beginning of 2019, of the first large-scale food store
in France from the retailer Eataly, with 2,400 sq. m of retail
space – proof, if any more were needed, that rue Sainte-
Croix de la Bretonnerie is now fully integrated in the
Le Marais shopping circuit. Over time the street will
become the backbone of the neighbourhood. By linking
the historic streets of Le Marais (rue Vieille du Temple, rue
des Rosiers) to rue des Archives, rue Sainte-Croix de la
Bretonnerie thus connects with another sector, Beaubourg/
Les Halles, itself in full bloom since the redevelopment of
the Forum and the surrounding area.
The potential of the Haut-Marais is not as easy to
predict. Described for years as the natural expansion zone
for retailers already in Le Marais, or for brands seeking Le20
INTERVIEW
Citynove: a major player in the revival of Le Marais
Knight Frank: What development projects is Citynove
working on in Le Marais?
Citynove: Citynove, the property company of Galeries
Lafayette Group, manages around 800,000 sq. m in France,
including 70,000 sq. m in Le Marais alone.
As a major player in Le Marais, Citynove has been active
for more than six years in an urban renewal project
Étienne Tabareau designed to link the original BHV Marais store on rue de
Citynove Rivoli with the future Fondation Galeries Lafayette on rue du
Deputy General Manager Plâtre. This project began by revitalising the BHV Homme
courtyard, called La Cour Bleue, where we installed food
kiosks and the first 3D printing service in France. This was
done to create a meeting place for neighbourhood residents
and visitors to Le Marais. La Cour Bleue is currently
transitioning into Cour Rose. It opens onto rue du Temple
with La Forêt Bleue, an artwork by Ulla von Brandenburg
which we installed in 2012. We then had English architect
Jamie Fobert refurbish five stores on the rue des Archives.
Today these stores are home to the prestigious brands of
Givenchy, Moncler, Fendi, Gucci and Valentino. The elegant
windows of these boutiques follow the rhythm of the
Romain Labbé façades and are in harmony with neighbourhood’s historic
Citynove buildings.
Director of Architectural Identity
These actions mark the first step in a progressive
makeover of the courtyards between rue de la
Verrerie and rue Sainte-Croix de la Bretonnerie. Open
to the public, these courtyards will lead to a building
of 4,000 sq. m currently under redevelopment by DATA
Knight Frank: It has been more than a year since the
Architectes. The building will house Eataly Marais, with a
BHV Marais began opening on Sundays. How have the
little over 2,400 sq. m of retail space. Eataly, the largest
department store’s results been affected by Sunday
Italian marketplace in the world, will open its first store in
openings?
France at the former site of the Menier chocolate company.
Citynove: The impact has been very positive in terms The complex will be a lifestyle space combining restaurants
of sales and image. The store’s Sunday openings are and an upscale market of fine Italian food products.
an extension of prior change in certain parts of the Access will be via the rue Sainte-Croix de la Bretonnerie
neighbourhood, particularly the areas around Francs in the Fondation Galeries Lafayette. Founded in 2013,
Bourgeois and rue des Rosiers, which have been open on Lafayette Anticipations (the Galeries Lafayette corporate
Sunday for some time now. BHV Marais customers quickly foundation) will move into a nineteenth-century building
grew accustomed to shopping on Sunday, which soon at 9 rue du Plâtre. For the redevelopment of this industrial
became the second-biggest day of the week, after building, we and Lafayette Anticipations have worked with
Saturday. OMA, internationally acclaimed architect Rem Koolhaas’s
agency, which will install a metal structure 18 metres high
in the courtyard of the existing building. Equipped withRETAIL
INSIDE OUT
21
motorised adjustable floors, the structure can be configured We are designing just such a unique pathway through
for the various activities of Lafayette Anticipations. The our development projects for historic buildings. Take rue
opening of Lafayette Anticipations in the spring of 2018, Sainte-Croix de la Bretonnerie, with rue Rambuteau one
and the grand opening of Eataly in early 2019, constitute of the major east–west axes leading into Le Marais. The
the project’s final stages. Afterwards we’ll move on to our street’s commercial potential will rise significantly with the
latest ideas for Le Marais... arrival of Eataly Marais in the building we are developing at
no. 37, and with the second entranceway for the Lafayette
Knight Frank: In your view, what is so special about Le
Anticipations building, across the street at no. 44. Adjacent
Marais, compared with other prime Paris sectors? To
streets, especially rue du Temple, should also benefit. This
what extent can the neighbourhood be preserved?
will definitely be the case for rue des Archives. The ‘Cœur
Citynove: The richness and appeal of Le Marais lie in Marais’ project, in which WeWork will open coworking
its very diversity. It is precisely this meandering quality space – and which, incidentally, was developed in the old
that makes the neighbourhood such a fascinating place headquarters of Cofinoga (formerly Galeries Lafayette
to walk. While aimlessly wandering around Le Marais it Group) – has reopened to the public the Sourdis alleyway
is still possible to stumble upon boutiques, food shops, linking rue Charlot with rue Pastourelle.
restaurants, art galleries – even traditional workshops.
Future Eataly store, rue Sainte-Croix de la Bretonnerie, Paris 4thYou can also read
