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Luxury brands switch to short leases and pop-up stores as Hong Kong’s rents drop amid record vacancy rate in retail slump

  • Louis Vuitton is making the switch, with an Objets Nomades Collection show last month that exhibited furniture and homewares at the Pedder Building
  • Sennet Freres returned to Hong Kong as a bespoke wedding gown couturier this month at the space left empty by La Perla in Causeway Bay

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K11 Musea in Tsim Sha Tsui on February 27, 2021. Photo: Winson Wong
Sandy Li

Some global luxury brands are switching to short-term leases and pop-up outlets in Hong Kong, taking advantage of cheaper rental charges amid soaring vacancy rates in what was once the world’s most expensive high street commercial property market.

Louis Vuitton is one such brand making the switch, with an Objets Nomades Collection show last month that exhibited furniture and homewares at a two-level store in the Pedder Building diagonally across the road from its Landmark building boutique in Central. Sennet Freres, the century-old Parisian watchmaker, returned as a bespoke wedding gown couturier in December, occupying a four-storey, 8,740 square feet (812 square metres) space left empty since September by La Perla on Russell Street in Causeway Bay.

“We have confirmed several deals for big brands to take up between 1,000 square feet and 10,000 sq ft in Central and Causeway Bay for a term ranging from 10 days to three months,” said Oliver Tong, head of retail at JLL in Hong Kong.

The short lease is becoming the survival tactic for retail brands, especially those at the higher end that suffer the most from disappearing foot traffic and vanishing mainland Chinese shoppers, to help them pull through Hong Kong’s worst recession on record and the city’s unprecedented retail slump. Vacancy rates in Central stood at 15.3 per cent in the first quarter while 14.4 per cent of available retail space stood empty in Causeway Bay.

The four-storey retail space on Russell Street in Causeway Bay that was surrendered by La Perla last year, as of September 7, 2020. Photo: Handout
The four-storey retail space on Russell Street in Causeway Bay that was surrendered by La Perla last year, as of September 7, 2020. Photo: Handout
Shopping centre operators are also exploring new concepts, including the integration of art and cultural exhibition with retail sales to turn shopping into a social experience to attract foot traffic and generate business for their tenants.

Hongkong Land, a unit of the conglomerate Jardine Matheson and the largest landlord in Hong Kong’s Central district, opened hybrid cultural and retail space called BELOWGROUND at the basement of its Landmark Atrium in March. The first show there, called Time Travel, featured local artists Afa Annfa and Chino Lam with the street artist Cope2 on the same floor as the luxury brands Dior Men, Kenzo, Gucci Men and Celine Men.

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