In New York, the iconic Tiffany flagship reopened last spring after a three-year renovation that some analysts estimate cost $500 million. The interior windows of the ground-floor showroom where Audrey Hepburn's character shopped in the 1961 film "Breakfast At Tiffany's" have been replaced by video screens that project scenes of Central Park and the Manhattan skyline.
The luxury conglomerate's strategy carries risks. The return on investment in real estate is relatively low. The industry is currently beset by increased construction costs, skyrocketing insurance premiums and interest rates, and plummeting office market values. Last year LVMH conceded defeat after losing a voter referendum to redevelop a Beverly Hills, Calif., property it bought in 2018 for $245 million into a Cheval Blanc hotel.
In 2017, L Catterton jumped into a $2 billion redevelopment project in the Vancouver suburbs, in a predominantly blue-collar neighborhood where a local developer was turning an old shopping mall into a master-planned neighborhood with retail, residences and offices.
The project never took off as a luxury-shopping destination, and high-end retailers, including Louis Vuitton, instead ended up committing to another mall-redevelopment project in a more affluent area.
Like all real-estate developers, LVMH also contends with its share of community pushback. Its Pont Neuf redevelopment in Paris faced lawsuits over their plan to demolish and redevelop one of the facades of La Samaritaine with a modern, undulating glass design. And in Montreal, local residents worry that a large retail project will snarl traffic and cannibalize the city's downtown.
In that city, LVMH, through L Catterton, is working with a local developer who spent years acquiring 80 acres of land in what used to be a light-industrial part of the city's center. The $1.5 billion first phase of Royalmount, a luxury mixed-use retail development scheduled to open this year, is to include shopping, dining, an open-air central park and an elevated highline-style walkway.
In a promotional video for the development, Burke said Montreal was the only other city where he saw as much potential as he'd seen in Miami for this kind of project.
LVMH's influence is clear. L Catterton's real-estate head, Mathieu Le Bozec, is the former head of an LVMH real-estate affiliate that merged with Catterton in 2016 to create L Catterton.
"We don't do a project unless we've spoken to LVMH," Le Bozec said.
Write to Deborah Acosta at deborah.acosta@wsj.com and Kate King at kate.king@wsj.com
(END) Dow Jones Newswires
April 26, 2024 21:00 ET (01:00 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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