Top brands tipped to exit Emporium
Several luxury brands are set to abandon Melbourne's embattled Emporium development after high-end tenant Gucci ditched its new store in the flagship retail project in favour of expanding its store in Collins Street.
Within weeks, Gucci is expected to announce a new store in a sought-after Collins Street location despite initially committing to a large space in the Emporium building.
The move is likely to have a cascading effect on other luxury retailers signed up to the $1.16 billion Lonsdale Street project as most top-end global brands include "adjacency" clauses in leases to ensure they are located with similar upmarket tenants.
Other high-profile tenants such as Salvatore Ferragamo and Bottega Veneta - a Gucci subsidiary - were reconsidering and some put out feelers for other Collins Street options, industry sources said.
Gucci is expected to take over the Ermenegildo Zegna store next door to its current Collins Street site, giving it a much larger corner footprint onto Russell Street.
"If Gucci is not going into the Emporium, my understanding is they will be expanding into the Zegna site next door," said former state government retail specialist and consultant Martin Ginnane.
Ermenegildo Zegna was speculated to be trying to negotiate space in the old Salvatore Ferragamo store at the top end of Collins Street, he said.
The loss of Gucci and others will be a significant blow to Emporium's premium status and comes after a series of construction delays, cost overruns, write-downs, bitter union stoushes and court action.
The Emporium, half owned by CFS Retail Property Trust Group (CFS) and the Government of Singapore Investment Corporation, is being built by Grocon on the site of the former Myer Lonsdale Street store.
Myer will retain a large space and part ownership of the retail complex. Construction was supposed to finish in December but is now expected to finish in March after building unions blockaded the site.
The project suffered a $125.9 million write-down after an independent revaluation after changes to the building to accommodate luxury tenants and Melbourne's subdued leasing environment.
CFS's head of investor relations, Penny Berger, said the company did not comment on individual leasing deals or tenancies.
"What we have said in August, and nothing has changed since, is that the development is still leased in excess of 90 per cent by income," she said. "We're very happy with how things are going. It's on target."
Other brands to sign as Emporium tenants include Japanese fast-fashion brand UNIQLO, which is expected to have a four-level store in the development, Max Mara, Paul Smith, Miu Miu, Mulberry, Scanlan & Theodore, sass & bide, Zimmerman, Oroton, MARCS, SABA, lululemon, Carla Zampatti, Georg Jensen and Alannah Hill.