MILAN — Competition in retail real estate is heating up.
Kering said Thursday that it has acquired a storied building on luxury thoroughfare Via Montenapleone in Milan.
The transaction with the building’s former owner, a subsidiary of Blackstone Property Partners Europe, was valued 1.3 billion euros.
The 18th-century palazzo, one of the largest on the street located at the heart of Milan’s Golden Triangle luxury shopping district, spans five floors covering more than 127,000 square feet.
“This investment is part of Kering’s selective real estate strategy, aimed at securing key highly desirable locations for its houses,” the company said in a statement Thursday. “Kering remains focused on proactively managing its real estate portfolio with the short- to medium-term objective of retaining a stake in its prime assets alongside co-investors in dedicated vehicles,” it added.
The stately palazzo is home to the Saint Laurent store, part of the luxury conglomerate’s stable, as well as pastry shop Cova, owned by competitor LVMH Moët Hennessy Louis Vuitton, Prada’s women’s store and footwear specialist Giuseppe Zanotti. The building boasts 53,800 square feet worth of retail space, Kering said, currently occupying the ground and first floors.
The conglomerate did not mention plans for the future of current tenants’ leases.
Milan’s Via Montenapoleone was ranked as the world’s second most expensive retail streets last year at $1,766 per square foot, following Manhattan’s Fifth Avenue at $2,000 per square foot, according to Cushman & Wakefield’s annual report, “Main Streets Across the World,” which focuses on venues for luxury brands. That report estimated that Via Montenapoleone’s average rents in 2023 rose 20 percent year-over-year and were 31 percent ahead of pre-pandemic levels.
Kering’s acquisition in Milan comes a few months after the French group, parent to Gucci, Brioni and Balenciaga, among other luxury labels, paid $963 million, or 885 million euros, to acquire 715-717 Fifth Avenue in Manhattan, a prime piece of real estate on the southeast corner of 56th Street.
Prada made a similar move in Manhattan, acquiring 724 Fifth Avenue, which houses the Prada flagship store, and 720 Fifth Avenue next door for a combined $835 million.
Elsewhere in Milan, competition is similarly strong.
Ten brands competed in the auction to secure a lease of a 1,870-square-foot space inside luxury shopping arcade Galleria Vittorio Emanuele II, previously home to Swarovski. They included Prada; Valentino; Tiffany & Co.; Tory Burch; Jil Sander; Montblanc; Damiani; Swatch; Samsonite, as well as Swarovski itself, whose lease expired at the end of January.
In a recent exclusive interview with WWD, Prada’s chief executive officer Gianfranco D’Attis said the company has ambitious retail plans, including for Milan. “We want to make sure that we will secure brand visibility in those key markets to offer an evolved client experience,” he said. “There are plans for Milan, too — after all, the city is our home — to increase our footage. And to increase our client experience here. I won’t be able to share too much insight, it’s going to be something big,” he hinted.
