milano shopping - · pdf filethe jll guide to high street retail real estate in milan milano...

The JLL guide to High Street retail real estate in Milan

Milano Shopping

In collaboration with

In the dynamic world of retail, the high street is attract-ing growing interest. Despite the crisis, high street and luxury goods retailers have successfully resisted the difficult economic climate. Within this context Milan retains its fashion capital reputation, with top notch in-ternational retailers having recently opened or being about to open new stores there, often their first Ital-ian unit. These include, among others, Hackett, COS, Le Coq Sportif. Existing retailers are recording better performances on Milan’s high streets than across the rest of their portfolio, whilst Burberry, Damiani and Val-entino for instance, have also renovated their offer with new flagship stores.

This report aims to offer an insight in Milan’s high street property market, looking at luxury and mainstream high streets locations, so as to provide both special-ist corporate and investors clients with an outlook on this dynamic market segment. We firstly provide an overview of Milan’s retail economy, looking at its retail fundamentals and its strengths, also putting it in con-text against the broader international arena. We then illustrate the emerging trends in Milan’s high streets and through emerging policy changes that we expect to influence Milan’s retail property sector. Finally, we introduce the nine high streets analysed by presenting a short profile of each of them.

Preface

Contents

Preface Key messagesMilan consumers outlookMilan in the International retail property hierarchyMilan’s retailscapeThe policy contextMilan high streetsMethodology

359

1519313573

This project is the result of the collaboration of Jones Lang LaSalle and Sincron Inova. Jones Lang LaSalle is a Real Estate consulting company with extensive experience with both corporate as well as investors Clients. Jones Lang LaSalle retail market knowledge makes it advisor of choice for operating in the Italian market. Sincron Inova is a consulting company developing economic and statistical research to provide value-added analysis, trends, estimates and simulations to support retail industry players with their investment and strategic decisions by providing them. While all information is provided to the best of our knowledge, we assume no liability for the correctness of the information Jones Lang LaSalle’s knowledge of retail market, together with the over 40 years’ experience of Sincron Inova, has allowed an in-depth qualitative and quantitative analysis of this important business segment that apparently knows no setbacks for the crisis. We would also like to thank Franco Benatti, Pietro Croce, Avv. Guido Inzaghi and Prof. Luca Tamini for their time and for contributing to our work.

5Milano Shopping

Milan at the top of the retail property ladderWhile Italy is facing challenging times because of con-tingent and structural economic problems, it still is the fourth EU economy by GDP size. Milan features an even more positive consumer economy. Ranking 10th among the JLL EU cities sample by purchasing power it also benefits from a large and varied potential con-sumer base, including its wealthy residents, business, fashion and design tourists, and students. It ranks fifth among the top attractive cross-border retail destina-tions in Europe, and it is third by presence of top 100 luxury brands. The rate of new openings confirm that the City is still a destination of choice for Italian and International retailers. Looking at rental values, Via Montenapoleone is among the top ten luxury streets in Europe, and Corso Vittorio Emanuele II and Corso Venezia see values in line with London Sloan street and Paris Boulevard Saint Germain.

Targeted expansionRetailers are adopting increasingly structured prop-erty portfolio strategies, aiming to maximise revenues in whichever location is best suited. This results in a targeted expansion pursued by both mainstream high street and luxury retailers, and Milan is scoring high on their priority list. According to the Jones Lang LaSalle 2011 Cross Border Retailer Attractiveness Index, Milan is the fifth top attractive cross-border retail destination in Europe, after only London, Paris, Moscow and Ma-drid. It is also third after Paris and London in terms of presence of top 100 luxury brands.

Specialised locationsMilan is experiencing an increasing specialisation of its shopping experiences, with prime pitches in increas-ingly strong demand. As elsewhere in Europe, retail destinations increasingly need to offer an all-round shopping experience which includes a specialised re-tail offer so that consumers can compare offers, de-signs and quality, and shop around for the best value for money as well as for the quality they are looking for. Clustering is therefore a growing feature of Milan

Key messages

6 Milano Shopping

high streets, as for Via Torino urban fashion and phone & accessories, or sportswear in Corso Buenos Aires. This means that retailers are increasingly aware of the benefit from proximity to top performing competitors and that offbeat locations risk becoming more periph-eral. Room for expansion for International retailersOf the 153 international brands considered in the JLL Cross Border Retailer Attractiveness study1, more than 60 are yet to enter the Italian market. These include, for instance, high street giants TopShop, Uniqlo and Urban Outfitters just to name a few. Large international department stores are also missing, like Debenhams and Marks & Spencers. Coupled with evidence of a relatively solid performance of good high street loca-tion, this suggests that some of the brands that are cur-rently missing from the Italian streets may in fact want to consider an entry.

Luxury still shining brightlyA market segment that has faced the bad weather even better than others is that of luxury goods. From

a real estate perspective, the increased competition for consumers’ attention and spending in an increas-ingly globalised and multichannel shopping world have led high-end brands to enter new markets and also renovate or expand existing stores or relocating to more strategic areas. Furthermore, fashion houses are working to leverage on their location and rational-ise their networks. Newcomers are increasingly more interested in locating their shops in prime locations and especially near top-level brands, trying to benefit from spill over effects. This trend is creating additional demand for the already scarce space supply in high streets, sustaining rent levels despite the wider eco-nomic environment.

High Street: A core optionFrom an Investment point of view, Italian High street retail is also becoming an increasingly core option for national and international investors alike. This reflects into transacted volumes reaching almost €900 mln up to Q4 2011, over 10 properties transacted. This is against 16 out-of-town retail schemes transactions, ac-counting for just over €1 billion over the same period.

1 http://www.joneslanglasalle.eu/emea/en-gb/pages/newsitem.aspx?itemid=24393

7Milano Shopping

No further activity has been recorded so far in Milan in 2012, but Q1 has been a relatively quiet quarter across all commercial sectors and also in the rest of Europe.

Retail and the High StreetAn increasing number of shoppers going back into the City Centre has gone hand in hand with urban poli-cies aimed at revitalising existing high streets giving new impetus to areas that had lost some of their lustre, capitalising on the unique setting that Town Centres still offer relatively to a certain degree of homogenisa-tion of the retail offer. In the usual virtuous circle that affects most of urban dynamics, this has been asso-ciated to a renovated interest by all types of retailers in Milan’s high streets. National brands seeking repo-sitioning like OVS on Via Torino, International brands looking for a successful first move in the Italian market such as Banana Republic on Corso Vittorio Emanuele II, or brands aiming to strengthen their competitive po-sition by expanding and refurbishing existing spaces as for instance the new Bershka flagship store again on Corso Vittorio Emanuele II.The location of the nine selected streets and the cur-

rent retail offer both suggest that there is room for icon-ic brands and targeted place-marketing initiatives to further increase the liveliness, and in turn footfall and potential sales, of some of the studied areas. Looking at examples abroad, Primark and Selfridges, on the quieter end of Oxford Street towards Marble Arch, and the Abercrombie & Fitch store on the Champs Elysées in Paris, all attract vast amounts of shoppers, including tourists that get drawn to the iconic, albeit in very differ-ent ways, stores. Think also of the traffic-free shopping days in London’s Oxford and Regent’s street, which in 2012 reportedly brought one million shoppers to visit the area over the weekend2. And, in the same area, think of private management company New West End Company and all the services it offers to shoppers and retailers alike3, which effectively provide an out-of-town gallery shopping experience in an high street setting.

2 http://www.bbc.co.uk/news/uk-england-london-11853632

3 http://www.newwestend.com/

9Milano Shopping

Milan is Italy’s prime world city in the global city net-work4. Despite the weak performance of the Italian economy over the last ten years Milan is still in a strong economic position, producing 9% of Italian GDP, featuring a concentration of corporate activities and ranking 10th among the JLL EU cities sample by purchasing power. Accordingly it also benefits from a large and varied potential consumer base: Milan ranks 8th out of 55 European cities by population size, it fea-tures a large student population attending some of the top state and private universities, and hosts a large number of fashion and design events adding to more conventional business tourism.

Milan retail economyBalancing growth and budget savings is proving dif-ficult for all European countries. Italy is facing greater challenges due to market perceptions of country risk, particularly in light of the EU governance crisis, and structural economic issues. A sticky and dycotomic labour market with young people and women being mostly disadvantaged, and public spending inefficien-cies are now an additional hinder to Italy’s recovery.

Nonetheless Italy remains the fourth largest economy by GDP behind Germany, the UK and France, with a GDP which is one time and a half that of Spain and only 20% lower than France’s.Although the recession has officially set back in in Q4 2011 in Italy, Milan retains its position in the global city network, and the retail market is as lively as ever as suggested by Prada’s recent bidding for the Galleria Vittorio Emanuele II space. Milan is the most dynamic of Italy’s metropolitan areas, as well as its commercial and financial heart. With over 1.3 millions residents within the city boundaries and 3.1 millions living in the overall metro area5, Milan ranks 8th out of 55 European cities by size. Per capita GDP has been relatively sta-ble since 2006, and while current economic forecasts have put forward the hopes of growth until at least 2013, Milan is expected to maintain its advantage over the national averages.From a retail point of view, Milan shows a favour-able economic environment. Gross disposable income and gross consumption per capita, at over €28,000 (€25,500 in the Province) and over €21,000 respec-tively in the City, are higher than the Regional and

4 http://www.lboro.ac.uk/gawc/rb/rb377.html

5 Data refer to the Provincia di Milano

Milan consumers outlook

10 Milano Shopping

National figures. Consumer spending is expected to grow by 1% per annum up to 20156. With a purchasing power of €22,100, Milan ranks 10th among the JLL EU sample. Looking at income earners, 24% of inner city residents, twice as many as the Italian average, earn more than €33,500 and 12%, more than twice the Ital-ian average, earn more than €50,000. Moreover, Milan specialisation in fashion and design is known world-wide.Indeed, shopping tourism is a significant segment on its own. Milan is one of the fashion capitals of the world; in fact, it houses many of the most famous designers. In February and September it hosts Milan Fashion Week, one of the four primary yearly fashion events alongside Paris, London and New York. Such events have helped Milan establishing a role for itself as a shopping desti-nation. According to a research by the IULM University, 70% of tourists report shopping to be the primary or secondary reason for visiting Milan. Moreover 42% of those arriving in Milan decide to prolong their visit in or-der to shop. Among other fairs, the Milan International Design Week (Salone Internazionale del Mobile), held in April, also attracts operators and visitors from all

Milan, Consumer economy indicators,2010 and 2011

Source: Gross disposable income and gross consumption per capita, Sincron Inova 2010. GDP per capita, OEF data as of 12/03/2012

05.000

10.00015.00020.00025.00030.000

Gross disposable income per capital (€)

Gross consumption per capita (€)

City of Milan Province of Milan Lombardy Italy

-

10.000

20.000

30.000

40.000

2006

2008

2010

2012

2014

2016

2018

2020

GDP per capita (€)

Italy

Provinceof Milan

11Milano Shopping

over the country and abroad.Milan visitor flows, due to its business and shopping relevance at the National and International level, peak between February and May and September and Oc-tober. The opening of a new conference centre called Mico close to the former Milan Fair area (where the CityLife development is taking shape), with a capacity of 20,000 people, confirms the importance of business tourism in Milan. Further demand is also expected to arise as a result of the 2015 Expo, which could gener-ate visitors flows for further 20 millions. International business visitors represent 60% of all annual overnight stays, mostly from Germany, the US and Russia. The luxury hotel market benefits from such flows, display-ing high occupancy and average revenue per room figures. The business visitors base contributes signifi-cantly to luxury shopping vitality in the City. And on a specialised website Milan is the third recom-mended best shopping vacation in the world after New York and Paris7.

6 Oxford Economics data 20117 http://www.tripadvisor.com/Inspiration-g1-c5-World.html

Milan, % of income earners by income levels, 2010

Source: Sincron Inova 2010

Source: Jones Lang LaSalle on 2011 Oxford Ecaonomics Data, 2012

Milan and EU 27, GDP per capita at NUTS 3 level, 2011

13Milano Shopping

Retail fundamentals and outlookIn the last two years Italy’s historical structural eco-nomic inadequacies have suddenly become a major source of concern to International investors. This has been driven by the sovereign debt crisis and the further political turmoil arising at the EU level, culminating in Standard & Poor’s decision to downgrade Italy’s rating alongside other 15 Eurozone countries, and to give it a negative outlook. With a renewed concern over south-ern Europe economies, a worsening of the outlook for Spain and uncertainty over the Greek situation, Italy was once again in the spotlight in June, despite Fitch statement that it is unlikely to need a bailout as its economy is in a much better state than Spain8. The key retail indicators suggest that 2012 will be a tough year for retailers. The contracting output and growing consumer prices and unemployment are expected to affect Italians’ consumption behaviour. Consumer con-fidence, down year on year and also quarter on quarter in December 2011, is now up 5% Q-o-Q in March, but is still below the base year (2005). Consumer sentiment reflects negatively on aggregate retail sales forecasts, which are expected to further decline both in Italy and

Milan, tourism as economical factor, 2010

Source: Osservatorio del Turismo, Provincia di Milano, 2010

Overnight guests N (mln) % out

of total Arrivals in total 2010 5.6

Of which from foreign countries 2.8 51% Overnight stays in hospitality industry 2010 11.6

Of which from foreign countries 6.2 53% Duration of stays in average 2 days Increase of overnight stays 2009 to 2010 0,1

8 http://www.bloomberg.com/news/2012-06-12/italy-is-unlikely-to-need-emergency-rescue-fitch-

says.html

14 Milano Shopping

in the forms they purchase them. Affordable luxury is something that consumers are increasingly interested in. Small luxury items with relatively low unit costs, like make up or eyewear and other small accessories, are the product types that consumers indulge in, having to curb their expenditure on more costly items.On the supply side, emerging national and local plan-ning policy point to opportunities for change on Milan’s high streets. New legislation has been recently intro-duced deregulating retail opening hours and removing regulatory constraints to the expansion of commer-cial space both in and out of town. Such measures are expected to foster growth in the medium to long term, as well as contributing to a change in consumers behaviour. On the other hand, tax reforms as well as pension and labour market reforms may depress retail fundamentals in the short term, with the Corte dei Conti (the official Italian auditing body) suggesting that the estimated total tax pressure at 45% may conflict with proposed growth objectives. A more detailed overview of the main policy initiatives and their implications for high streets in Milan and across Italy is presented later in the report.

the Milan province in 2012 and 20139.The current economic environment can contribute to shaping a new consumer economy in Italy, as is al-ready happening elsewhere. Italian consumers are somehow catching up with their European counter-part in the search for a more complete and informed shopping experience. According to GFK Eurisko the economic crisis is expected to lead to not to a plain reduction in sales, but to a broader change in attitude towards consumption. Their annual “Climi di consumo” survey has recorded a contraction in both leisure and clothing expenditure, but also a sustained inter-est in brands which have managed to establish their reputation and whose demand is now less sensitive to promotional campaigns; a fifth of consumers is still favouring quality over price. Values of quality, social-ity and tradition have survived the recession, with a more complex concept of consumer experience that will be increasingly sought after. At the same time, the substantial growth in online luxury retailing and good performance recorded by luxury factory outlet centres suggest that consumers are still looking for aspirational buys but are becoming more savy and more flexible 9 Oxford Economics forecasts

15Milano Shopping

Despite the economic crisis Milan is still one of the most attractive retail locations worldwide. With brands looking for profitable cities to expand in, the concentra-tion of Italian and International brands as well as the number of recent luxury and mainstream high street openings confirm that Milan’s attractiveness to retail-ers has not subdued. Rental levels are also appealing to retailers, with the nine analysed streets presenting a wide range of potential locations for retailers with dif-ferent budgets and market positioning.

The international competition for brandsOver the last few years Milan has seen unprecedented interest by high street retailers of all price ranges and standing. Hackett has recently opened in Corso Ven-ezia, snapping up a large and visible unit, COS has opened in the former Armani store in Corso Venezia, and Comptoir des Cotonniers and Zadig & Voltaire have brought Parisian chic to the City in Corso Vercelli. This is the result of an increasingly structured property portfolio strategy pursued by retailers, aiming to max-imise revenues in whichever location is best suited. The target may be a fast growing geography or an

established rich one, but also one in which short term losses may be counterbalanced by a positive impact in terms of visibility in the market place. In the current challenging economic climate retailers are even more careful in unearthing pockets of growth which have been untainted by the crisis. This approach of targeted expansion is shared by both mainstream high street and luxury retailers, and Milan is scoring high in their priority list. According to the Jones Lang LaSalle 2011 Cross Border Retailer Attrac-tiveness Index, Milan is the fifth top attractive cross-border retail destination in Europe, after only London, Paris, Moscow and Madrid. For a number of the luxury and mainstream international brands considered Milan is the only Italian city in which they are active, as is the case with Abercrombie & Fitch and Banana Republic. Looking at luxury retailing in particular, with the most important European markets by sales being Italy, France, the UK, Germany and Russia, no other retail sector is as internationalised as the market for luxury goods. Europe remains the most important one world-wide, representing about 40% of the total turnover of retailers such as LVMH and Hermès. The JLL “Glitter

Milan in the International retail property hierarchy

16 Milano Shopping

& glamour shining brightly” study of the 100 most re-nowned luxury brands and their presence in Europe’s metropolitan centres found that Milan is only third af-ter Paris and London in terms of presence of top 100 luxury brands. Chloé, Marc Jacobs and Ralph Lauren, which were not considered in the 2011 Luxury Retail study, have chosen Milan as their only Italian location. Recent luxury openings and refurbishment include Stella McCartney, Burberry Brit and the new Louis Vuit-ton Flagship store.Among the top three, Milan is also the city with the highest density of top luxury brands, when compared against its size by population.

Rental levels across EuropeVia Montenapoleone, in the heart of Milan’s Quadri-latero della Moda is the fourth most expensive street in Europe. This puts Milan’s luxury street at the top of the global retail property hierarchy: the concentration of luxury brands and the visibility of any new opening in such a context clearly comes at a dear price for re-tailers. Moreover, Milan is well positioned across the entire

Europe, Number of top luxury brands by city, 2011

Source: Jones Lang LaSalle, 2011

8 12 13

22 27 28 28 28 30 30 32 33 36 38

46 47

59 66

87 125

154

- 50 100 150 200

Warsaw Budapest Antwerp

Amsterdam Istambul

Vienna Frankfurt

Prague Brussels

Dusseldorf Hamburg

Zurich Barcelona

Berlin Munich Madrid Rome

Moscow Milan

London Paris

17Milano Shopping

rental price range though, offering a variety of locations suitable for all pockets and desired market standing. Corso Venezia, where Hackett has recently opened its first Italian store, and Corso Vittorio Emanuele II, sit alongside Sloane Street and Boulevard Saint Ger-main in the €3,000 to €6,000 rental bracket. All the other streets we have analysed feature notional prime rents below the €3,000 threshold. One would however be misled if concluding that Milan high streets are af-fordable retail locations. Unit size and, most of all, key money is crucial in determining effective rents and relatively low notional rents may be associated with substantial key money levels.

Europe, Number of top luxury brand stores and city market share, by population, 2011

Source: Jones Lang LaSalle, 2011, and Eurostat 2012, INSEE 2012, ONS 2012, Russian Office for National Statistics 2012, Turkish office for National Statistics 2012

and iamsterdam.com

ParisLondon

Milan

Moscow

Rome

Madrid

-

2

4

6

8

10

12

14

16

- 50 100 150

Popu

lation

, mln

peop

le

Number of luxury brand stores

Source: Jones Lang LaSalle, 2011 and 2012. Prime rent is defined as the EUR price per sqm and year of a sustainable rent that can be achieved for a newly let notional space in an absolute prime location. Such an assumed unit is characterized by a sales area of 100 to 200 m2, stair-free ground-floor access. Rental levels in the Galleria Vittorio Emanuele

II reflects its public ownership. There is talking of a mixed public – private ownership in the future, which may be expected to influence rental values.

Europe, Luxury shopping streets, Prime rents in Euro/m²/year 2011 – 2012

19Milano Shopping

Milan City Centre features one of the most vibrant re-tail scenes in Italy and Europe, with around 500,000 m² retail space. JLL Research has analysed the nine most important high streets in Milan City Centre, those with the greatest historic and commercial relevance in Milan and that cover the entire range of mass to middle up to luxury retail markets.Our analysis shows the retail offer is evolving in Milan, as is the entire shopping experience consumers can find. The map in Figure 8 shows the location of the nine streets analysed, which are Corso Vittorio Emanuele II, presented at the 2011 MAPIC fair; Via Montenapo-leone; Corso Venezia; Via Manzoni; Via Dante; Corso Buenos Aires; Via Torino; Corso Vercelli; and the Gal-leria Vittorio Emanuele II, the “Salotto di Milano” and oldest shopping gallery in Europe, which many others have adopted as a model and where Fratelli Prada opened their first shop in 1913.More specialised high streets are emerging as a result of a mix of dynamics that have transformed high streets elsewhere in Europe. On one hand there is a tendency of retailers to cluster close to their competitors in order to benefit from spillovers from established brands as

well as to attract their shoppers on one hand. On the other shoppers have become and prefer a single retail destination for their shopping to better satisfy their re-tail needs, and sometimes more affordably, as well as to have a more holistic retail and shopping experience strolling along the city . Also, large retailers with stores across the globe and attention-grabbing flagship stores are increasingly pre-sent on Milan’s high streets. This does not mean that high streets are the same here as anywhere else in Europe: indeed the majority of chain stores belong to large and globalised Italian brands. In Corso Vittorio Emanuele II for instance the area has retained its tra-ditional mixture of luxury mono and multi brand stores (for instance Max Mara, Vergelio and Gobbi) and nu-merous upper end brands epitomising good quality and design made-in-Italy products, such as Luisa Spagnoli, Max&Co, Pennyblack, Pollini, and Furla among others.The presence of an increasing number of recognis-able brands, the relatively positive performance of high street shops compared to other locations, and the rela-tive opacity and private nature of the market, all con-tribute to making the High Street an increasingly core

Milan retailscape

Source: Jones Lang LaSalle 2012

Milan, The nine high streets considered in this report

C.so Vercelli

Via Manzoni

Via Dante

Via Torino

C.so Vittorio Emanuele IIGalleria Vittorio Emanuele II

C.so Venezia

Via MontenapoleoneC.so Buenos Aires

21Milano Shopping

option for investors. Moreover, returns which put Milan in a favourable position compared to other European cities mean that there is also room for new internation-al investors to start considering it as a potential target location for their pots.

Specialisation: hotspots become hotterMilan is experiencing an increasing specialisation of its shopping experiences. Over the last few years defined hierarchies have been emerging within and among the different shopping districts. For instance, Corso Vittorio Emanuele II has strengthened its reputation as the top location for all clothing and accessories retailers, from upper-end (e.g. Luisa Spagnoli or Furla) and luxury Italian brands such as Max Mara, to International high street giants like H&M and Gap. The priority destina-tion of choice for most high street retailers for an entry in the Italian market, footfall is the highest of all the streets considered in this study, with just under 18.000 people per hour on average.Despite the proximity, footfall in Galleria Vittorio Ema-nuele and via Dante is around a quarter of this. Re-tailers have so far shied away from opening stores

Corso

Vitto

rioEm

anue

le II

Galle

ria V

ittorio

Eman

uele

IIVi

aMo

ntena

poleo

ne

Corso

Ven

ezia

Via M

anzo

ni

Via D

ante

Corso

Bue

nos

Aire

s

Via T

orino

Corso

Ver

celli

Milan, Estimated footfall at selected high streets

Source: Jones Lang LaSalle’s elaboration on Sincron Inova and Jones Lang LaSalle data, average between recorded footfall 16/04/2011 e 22/04/2011

22 Milano Shopping

0%10%20%30%40%50%60%70%80%90%

100%

Corso

Vitto

rio E

manu

ele II

Galle

ria V

ittorio

Ema

nuele

II

Via M

onten

apole

one

Corso

Ven

ezia

Via M

anzo

ni

Via D

ante

Corso

Bue

nos A

ires

Via T

orino

Corso

Ver

celli Oxford

Street

Milan and London, Distribution of shops by product type in selected high streets, % of total retail units

Source: Jones Lang LaSalle’s elaboration on Sincron Inova and

Jones Lang LaSalle data, as of 09/04/2012

in these two locations,, in addition to those in Corso Vittorio Emanuele II, presumably on the basis that Corso Vittorio Emanuele would cannibalise their sales. Indeed of the 55 retailers with a store on Corso Vitto-rio Emanuele II only 12 are also present in via Dante, and only two in the Galleria, Nara Camicie and Luisa Spagnoli.In general, prime pitches are in even stronger demand: in Europe online retailing and a wider drive towards affordable shopping are driving consumers to more focused shopping trips. This phenomenon is also in-creasingly visible on Milan’s high streets, think of the telephone cluster in via Torino towards the Carrobbio area, or of via Dante’s children stores. These pull fac-tor helps sustaining rents despite the weak economic environment. Retail destinations increasingly need to offer an all-round shopping experience which includes a specialised retail offer so that consumers can com-pare offers, designs and quality, and shop around for the best value for money as well as for the quality they are looking for. This means that not only do retailers benefit from proximity to top performing competitors, but that they actually risk missing out by choosing a

23Milano Shopping

location that may appear sheltered from competitive pressures. This may happen at the expense of loca-tions off the beaten track, unless these develop some really unique shopping experience that turns them into a leisure destination (think of the niche offer of the Brera area in Milan or of Camden Town in London).

We all need a flagship storeSometimes prime pitches do not offer the retail unit that retailers look for. With vacancy rates effectively at or well below frictional levels across all the high streets considered it is reasonable to expect that the unit that a retailer wants may occasionally be unavail-able. Indeed local operators suggest that, at least for the streets analysed, the owners of the few units which were vacant at the time of recording already had new tenants lined up for the space. As mentioned before, retailers are increasingly looking for proximity to other top-level brands. They are also seeking increasingly visible retail units which allow them to develop an all-round unmatched shopping experience. Flagship stores, which draw consumers into the brand’s world and aim to foster loyalty and stimulate impulse buys,

2% 0% 6% 5% 3% 1% 5% 4% 8%

0%10%20%30%40%50%60%70%80%90%

100%

Corso

Vitto

rio E

manu

ele II

Galle

ria V

ittorio

…

Via M

onten

apole

one

Corso

Ven

ezia

Via M

anzo

ni

Via D

ante

Via T

orino

Corso

Bue

nos A

ires

Corso

Ver

celli

Vacant

Next opening

Retail,Leisure andLocalamenities

Milan, Vacancy rate, % of total estimated frontage length in metres

Source: Jones Lang LaSalle’s elaboration on Sincron Inova and Jones Lang LaSalle data, as of 09/04/2011

24 Milano Shopping

are more and more a key element of retailers’ mar-keting strategy. Such stores also tend to be relatively large in size, as recent openings seems to suggest, both in Italy (the new Burberry store falls in the 250 - 499 m2 size bracket, and the Hackett one in the 500 - 999 m2) and abroad (see for instance the new Miu Miu flagship store in New Bond street). Such units are rather scarce across all the analysed high streets, with the exception of Corso Vittorio Emanuele II, the Gal-leria and Corso Venezia. Also, fragmented ownership means that organic growth by acquisition of adjacent units is more difficult to achieve; this imposes an ad-ditional constraint to retailers’ location choices.High demand for visible and high quality space close to competitors on one side, together with the limited avail-ability of such space, is starting to lead retailers to be more open-minded in their search for new store space. This is for instance what is being reported in Paris, and may well happen in Milan. Therefore while Montenapo-leone, Corso Vittorio Emanuele II and Corso Buenos Aires may be top of the list in the priority ranking of National and International retailers (if they can afford rents and key monies), it may be that it is the other

Milan and Berlin, distribution of shops by unit size in selected high streets, % of total estimated frontage length in metres

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

100%

Ku'da

mme &

Ta

uentz

iestra

sse

Fried

rich

stra

sse

Alex

ande

rplat

z

Hack

esch

er M

arkt

Schlo

sstra

sse

Wilm

ersd

orfer

stra

sse

Potsd

amer

Plat

z

>= 1000

500 - 999

100-499

< 100


0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

100%

C.so

V. E

m II

G. V

. Em

II

Via M

onten

.

Via M

anzo

ni

C.so

Ven

ezia

Via D

ante

C.so

Bue

nos A

.

Via T

orino

Corso

Ver

celli

N.a.

>= 1000

500 - 999

250 - 499

100 - 249

< 100

25Milano Shopping

high streets that they will eventually open up stores in. Think, for instance of Stella McCartney opening in via Santo Spirito, and Pirelli and COS in Corso Venezia (both have stores on Regents Street in London)10.

An International high street?There is often a presumption that high streets are be-coming increasingly anonymous across Western cities, with globalised brands taking over small local retailers. It is also often argued that foreign retailers are slowly becoming dominant. It is definitely the case that chain retailers are gaining space, with chains representing more than 60% of estimated frontage length across all high streets except the Galleria Vittorio Emanuele II (where amenities occupy a larger portion of space).The vast majority of brands, however, are Italian, in-cluding large Italian retailers with an international presence. These are no longer only top-end luxury brands, like Prada, Dolce & Gabbana and the likes, but also high street brands like Intimissimi, which is now present across London, including the two West-field in-town shopping centres, Coccinelle, Frette and Kiko, to mention but a few across a range of product

0%10%20%30%40%50%60%70%80%90%

100%

Corso

Vitto

rio E

manu

ele II

Galle

ria V

ittorio

Ema

nuele

II

Via M

onten

apole

one

Corso

Ven

ezia

Via M

anzo

ni

Via D

ante

Via T

orino

Corso

Bue

nos A

ires

Corso

Ver

celli

Amenities/Non-retailservices/VacantIndependent

Chain

Milan, Chain store penetration in selected high streets, % of total estimated frontage length in metres


10 The Wall Street Journal (tiered subscription only)

26 Milano Shopping

types. According the JLL 2011 Cross Border Retailer Attractiveness study, Italy is the 6th top exporter of re-tail formats across Europe, following the USA, the UK, Germany, Spain (which is growingly present with its In-ditex brands including the latest Oysho and Zara Home stores in Via Torino) and France.Out of the 26 retailers which are present with more than four shops each across the high streets consid-ered, 19 are Italian brands as shown in Figure 15.This is also true across Europe in the luxury segment, with about half of the 25 most present luxury brands being Italian.

0%10%20%30%40%50%60%70%80%90%

100%

Corso

Vitto

rio E

manu

ele II

Galle

ria V

ittorio

Ema

nuele

IIVi

a Mon

tenap

oleon

eCo

rso V

enez

iaVi

a Man

zoni

Via D

ante

Corso

Bue

nos A

ires

Via T

orino

Corso

Ver

celli

Amenities/ Non-retailservices/ Vacant

Foreign -International

Italian - Italy

Italian - International

Milan, Distribution of shops by retailer type in selected high streets, % of total estimated frontage length in metres


27Milano Shopping

Brand Number of shops

Nara Camicie 8Geox 7TIM6Vodafone 6Yamamay6Kiko 6Limoni 5Nadine 5United Colors of Benetton5Foot Locker 5Calzedonia 5H&M 5Intimissimi5Tanagra 4Prada4Luisa Spagnoli 4Vergelio 4Wind 4Marilena4Sephora 4Swatch 4Salmoiraghi & Viganò 4Levi's 4Camicissima 4Carpisa43 Store 4

4

4

4

5

5

6

6

8

01 02 03 04 05 0

Jimmy Choo

Number of stores

Christian DiorValentino

Paul SmithLa Perla

Giorgio ArmaniChopard

Bottega VenetaTiffany & Co.

Tod'sRalph Lauren

BulgariErmenegildo Zegna

ChanelSalvatore Ferragamo

Mont BlancHermès

BurberryEscada

PradaLouis Vuitton

CartierGucci

Max MaraHugo Boss

1212

Yves Saint LaurentVersace

1212

13141414141415

1819

2122222324242526

27282829

3541

Europe, Top 25 luxury brands, number of stores in luxury shopping high streets

Figure 15: Milan, Top brands by number of shops, selected high streets

Source: Jones Lang LaSalle, 2011


28 Milano Shopping

A core option for InvestorsThe high street segment was a major contributor to the record 2011 Italian retail investment volumes, with just under € 900 mln out of the almost €2 bln worth of pub-licly recorded retail deals. Two of the five deals greater than €100 mln are high street deals.In addition to the large size and importance of some of the assets transacted, the involvement of listed REITs (for instance like Immobiliare Grande Distribuzione), corporates (like Diesel and Nero Giardini) or funds and vehicles (like Gruppo Statuto and BNP’s Fondo Mario Negri) has also contributed to a more transparent High Street market in 2011. And although it would be mis-leading to compare 2011 figures with 2010 results, due to the mainly private nature of deals recorded in the High Street segment, it is meaningful that in 2011 a number of non-private investors have been active. Net yields have seen a compression, particularly for trophy assets, like the Apple Store in Bologna, as well as for owner occupier deals, as was the case for the Diesel store in Piazza San Babila, Milan, and the Nero Giardini one in Corso Venezia. The quality of the asset, its macro-location (city) and micro-location (street, and

Shopping Centre ,

6.25

Retail Warehousing

, 7.25

High Street Milan, 4.75

3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00

7.50

2007

Q1

2007

Q2

2007

Q3

2007

Q4

2008

Q1

2008

Q2

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

2009

Q4

2010

Q1

2010

Q2

2010

Q3

2010

Q4

2011

Q1

2011

Q2

2011

Q3

2012

Q1

Shopping Centre Retail WarehousingHigh Street Milan

Italy, Prime retail net yields by sub-sector, %, Q1 2012


29Milano Shopping

street position), the standing of the tenant, the possibil-ity of reversion and the layout of the store all affect the reliability of the expected cash flow and are therefore key drivers of value.At the same time, the private nature of most deals also helps keeping prices up, either because private opera-tors follow different logics from those of pure risk-return analysis or because the availability of equity allows a more aggressive behaviour. The High Street prime net yield as of Q4 2011 was at 4.75% in Milan, compared to a 6.25% yield for Shopping Centres, and are stable in Q1 2012. However, prime net yields are not always meaningful for High Street investors, whose main driv-er is often wealth preservation rather than investment return.The still limited transparency of the market does how-ever affect the nature of investors, as does the current-ly fragmented ownership that is typical of high streets in Milan as well as in other Italian cities. While it is true that more non-private investors have been active in 2011, almost all of them were from Italy. From an International investor’s point of view finding the right high street product is indeed complicated, due

Milan, 4.75

3.005.007.009.00

11.0013.00


Milan, High Street prime net yields against other European countries, %, Q1 2012

30 Milano Shopping

ties are available in Milan, outside prime pitches and suitable for retail specialists with a good knowledge of retail product. In the next year or so (12 months) some core product may also become available as existing institutional owners revise their portfolio management strategy and may decide to structure sale processes .

to the opacity of the market, and being competitive is equally difficult when comparing against domestic pri-vate investors. Nonetheless, the performance of High Street properties in Milan compared to other European cities suggests that there is reason for international in-vestors to keep an eye on the market despite historical difficulties in securing investment opportunities.With regards to the product itself, the amount of retail floorspace within Milan historical centre is relatively stable. The Excelsior luxury department store and the redevelopment of the area currently hosting the Gap and Banana Republic stores11 are the most recent ad-ditions to the area. New developments are now in the pipeline, which could give a bit of a shake to the sec-tor. The CityLife and Porta Nuova developments both aim to bring a new retail parade in the city centre, and in Via Torino the area adjacent to the FNAC store will also deliver some brand new retail space. In total some 40,000 m² GLA are expected to come through over the next two years, built to high specifications and with an eye to modern international retail formats, which may therefore appeal international investors.In the shorter term, value added investment opportuni-

11 http://milano.corriere.it/milano/notizie/cronaca/09_giugno_30/galleria_shopping_corso_vittorio_emanuele_spazi_dismessi-1601519076405.shtml

31Milano Shopping

The potential implications of recent changes in legis-lation for the retail sector and Milan’s high streets in particular are of interest to both retailers and inves-tors. All the analysed high streets of course share the broad regulatory setting in which retailers must oper-ate. While specific buildings may be subject to listed building regulations from which others are exempt, the broader trade regulatory framework is common.

Deregulation, taxation and growth: the national contextThe “Save Italy” bill, presented in December 2011, and the Deregulation bill, first presented in January 2012, both aim to introduce competition and foster entrepre-neurial initiative across a number of industries and the public sector at national level. Most importantly they aim to remove a wide range of restrictions currently affecting the opening of new retail activities, both in town centres and in out-of-town settings. Once fully implemented the only limitations to new retail activities will be those safeguarding public health, workers, the environment (including the urban built environment), and cultural heritage, with legislation imposing other

constraints to be repealed. The implication for high street retail in Milan is twofold. On the one hand the extension of the sales area is likely to become easier to pursue, and on the other de-partment stores and town-centre shopping centres are unlikely to be opposed to on other grounds than the ones listed above. There is of course a degree of uncertainty as to both the timeline for implementation and how strongly and effectively regional and local authorities will oppose such measures. However, the fact that the Govern-ment has indicated the end of 2012 as the deadline for full implementation at all administrative levels, with national elections not expected before 2013, suggests the current caretaking Government may be able to in-troduce further measures. Also, there is a general feel-ing that changes have now been set in motion, and maintaining the status quo may be too hard to achieve, even with strong actors aiming to protect it.In addition to regulatory changes, the Save Italy bill also introduced amendments to residential and com-mercial properties taxation, with what is now known as IMU (Imposta Municipale Unica, or Single Municipal

The policy context

32 Milano Shopping

tax). The expected impact of IMU on high street real estate is twofold. Firstly there is an impact on consum-ers demand, as the latest legislation brings the IMU forward to 2012 (it was initially due to be implement-ed in 2014) and can be therefore expected to affect household disposable income. Secondly there is an impact on property owners, via the higher revaluation indices and tax rate with a potential uplift deriving from a local additional rate on top of the national minimum rate of 0.76%12.

Local planning policy: Natural Shopping CentresAt the town planning level, the Comune di Milano has just approved the new city wide planning policy docu-ment (the Piano di Governo del Territorio, or PGT), which is expected to be published in September/ Oc-tober 2012. Apart from the uncertainties that are as-sociated with the current legislative gap and the final outcome of the PGT process, there is a specific policy trend that is of relevance to the evolution of Milan’s high streets.Natural Shopping Centres (Centri Commerciali Natu-rali, or CCN) have over the past few years grabbed

IMU Snapshot - June 2012

IMU Snapshot

Expected decline in asset values and rise in gross yields acrossall commercial real estate sectors.

Likelye ffects on lease agreements as well.

As ingle standard rate forr etail, office and logistics properties,subject to an increase or decrease determined at the municipallevel, although uncertainty will prevail until December 2012.

In collaboration with and

33Milano Shopping

Italian local trade associations’ attention. These are broadly defined as areas of the city hosting dense clus-ters of retail activities, within an area of at least 10,000 m2, and a number of policies are emerging across Italy that aim to protect and foster the liveliness of such ar-eas. In essence they represent the Italian response to the international experiences of town centre manage-ment (see for instance http://www.atcm.org/ for some UK references). Within the emerging PGT a formal definition of CCN for the city of Milan is being developed. The twofold aim of this is to encourage further development of retail activities within such areas as well as deal with some of the negative externalities that are associated with commercial areas, mostly when they are also host to substantial night economy activities. Already introduced by the previous City assembly, Milan’s Retail Urban Districts (Distretti Urbani del Commercio or DUC) are one of such Natural Shop-ping Centres as defined by the City of Milan. They are also part of a programme that the Comune di Milano, Regione Lombardia and private partners have devel-oped, putting together a ring-fenced funding pot total-

ling more than €10 mln in 2010 aimed at regenerating the retail units themselves, developing new client ser-vices within the DUC, improving transport accessibility, safety and crime prevention and marketing and com-munication. A first group of DUCs has already been implemented, and includes the areas of Brera, Isola and Navigli, but on March 13th 2012 Corso Buenos Aires and the Galleria Vittorio Emanuele II have been included in the list of DUCs13. The important implication for all High Street retailers interested in the Milan market is that all urban retail ag-gregations that are included in the PGT Natural Shop-ping Centre definition can be expected to be subject to a speedier planning application process for new commercial space, and retailers will not be expected to provide dedicated parking space, one of the largest entry barriers for new retail activities within the historic centre of the city. An example of this approach is the new Excelsior just off Corso Vittorio Emanuele II, which has developed an agreement with existing car parks in the neighbourhood.

12 See JLL IMU Snapshot, June 2012, for an insight on the matter.

13 See: http://www.comune.milano.it/portale/wps/portal/CDM?WCM_GLOBAL_CONTEXT=/wps/wcm/connect/ContentLibrary/giornale/

giornale/tutte+le+notizie+new/commercio%2C+attivita+produttive%2

C+turismo%2C+marketing+territoriale/duc_distretti_

commercio

Milan high streets

36 Milano Shopping

The pedestrianized Corso Vittorio Emanuele II emerges as the top retailer destination in Milan, with the maximum footfall across the analysed high streets and a strong retail offer with a broad range of powerful brands in mainstream Italian and International retailers. Two upmarket department stores are located within the Vittorio Emanuele area, including La Rinascente on Corso Vittorio Emanuele II and the Excelsior (Gruppo Coin) just off the Corso. While H&M and Zara opened their first stores in Milan in early 2000s, it was the opening of Sephora and Gap in 2010 that paved the way for a wave of new international openings, including the flagship and to date only Italian Banana Republic store. Renovations and expansions have also affected existing successful stores, such as Liu Jo and Intimissimi as well as the most recent Golden Point. There is also evidence of other established foreign brands looking for space in Corso Vittorio Emanuele II (Massimo Dutti has recently

open its second store in the area in the former Gusella store), with relatively high prime rents and key money restraining new entrances. The street now has a marked clothing vocation that mirrors Milan’s fashion hotspot reputation, with 65% of the total frontage length occupied by clothing and accessories retailers. The overall feel of the Street has improved significantly over the last 3-5 years, thanks to greater attention to windows displays – see for instance the Rinascente’s theme windows – and interiors design – as for the new Jean Nouvel’s Excelsior. Italian shoppers are being progressively exposed to an experience that could so far be found on iconic European high streets. Together with its retained uniqueness, with more than 80% of brands on the street still representing high street and upper end Italian retailing, its accessible location, the historical tradition of weekend strolling, and renewed retail offer can all help explain a footfall of around 18,000 per hour.

Corso Vittorio Emanuele II

38 Milano Shopping

22%

49%

18%

11% Foreign -International

Italian -International

Italian - Italy

Out of number of unitsRate of international retailers

Out of frontage lengthOut of number of units

Chain store penetration(**)Out of frontage length 86%

84%

22%24%

Rate of international retailers

Chain store penetration(**)

10%

15%

21%34%

20% < 100

100 - 249

250 - 499

500 - 999

>= 1000

Corso Vittorio Emanuele II, Distribution by retailer type and by unit size, % of total

estimated frontage in metres 2011

Source: Jones Lang LaSalle’s elaboration on Sincron Inova data,

as of 09/04/2012

Estimated frontage length(*)

% of total frontage length

Number of units

(*)

% of total number of

unitsTotal 807 62

Clothing 522 65% 36 58%Accessories 69 9% 6 10%Sport goods & Sportswear 10 1% 1 2%Jewellery 17 2% 4 6%Eyewear 3 0% 1 2%Toiletries, Cosmetics & Beauty Products 21 3% 3 5%Books, Music, Toys & Gifts 62 8% 2 3%Local facilities 48 6% 2 3%Restaurants and Food 22 3% 3 5%Vacant 16 2% 2 3%Next opening 17 2% 2 3%

< 100 78 10% 15 24%100 - 249 119 15% 11 18%250 - 499 169 21% 14 23%500 - 999 277 34% 14 23%>= 1000 164 20% 8 13%

Foreign - International 176 22% 15 24%Italian - International 391 48% 29 47%Italian - Italy 149 18% 11 18%Amenities/ Non-retail services/ Vacant 90 11% 7 11%

Of which by category:

Of which by dimensional class (sqm):

Of which by brand type (**):

Source: Jones Lang LaSalle’s elaboration on Sincron Inova data, as of 09/04/2012

Footfall is per hour in peak time.The retail unit indicated as Vacant between just after

via San Paolo is in fact a Golden Point which was being refurbished at the date of data collection.

40 Milano Shopping

The Galleria Vittorio Emanuele II is traditionally known as the Salotto di Milan and has been recently recognised by the City of Milan as a Retail Urban District (DUC), allegedly with the aim of protecting it from pressures by powerful retailers with development and growth plans that may be at odd with the City Council’s vision of the Salotto. While always occupying a prominent role in Milan’s shopping environment, the Galleria has recently come to the spotlight following the bid to occupy the current MacDonald’s store, where Prada outdid Gucci and Apple pushing annual rents up 150% over base level. This move will make the Milan fashion group the largest single occupier in the Salotto, with a total of about 30 metres of estimated frontage length.While the largest part of shops portraying Italian brands

also operational abroad, and luxury Italian fashion represented by Prada, Gucci and Tod’s, the majority of the units are either amenities and local services or mainstream retailers, with 32% of the estimated frontage length occupied by bars and restaurants (although the situation is expected to change with exit of MacDonald’s). The entry of Massimo Dutti suggests that the Salotto is also perceived as a good location for higher end diffusion lines of mainstream retailers.The availability of units of all size bands in a balanced proportion as well as the potential opportunity to expand retail space in the upper levels of the Galleria buildings is further expected to appeal to retailers looking for space in an iconic building with a high end and luxury standing.

Galleria Vittorio Emanuele II

42 Milano Shopping

20%

28%24%

28%< 100

100 - 249

250 - 499

>= 1000

13%

26%

22%

39%



Italian - Italy

Amenities/Non-retailservices/Vacant

Galleria Vittorio Emanuele II, Distribution by retailer type and by unit size, % of total

estimated frontage in metres 2011


as of 09/04/2012



Number of units

(*)


unitsTotal 265 42

Clothing 60 23% 10 24%Accessories 36 14% 8 19%Sport goods & Sportswear 3 1% 1 2%Jewellery 8 3% 2 5%Books, Music, Toys & Gifts 26 10% 4 10%Local facilities 10 4% 1 2%Restaurants and Food 86 32% 10 24%Textiles & Soft Furnishings 8 3% 1 2%Other 16 6% 4 10%Telephones, Accessories & Electricals 13 5% 1 2%

< 100 52 20% 18 43%100 - 249 75 28% 9 21%250 - 499 62 24% 9 21%>= 1000 75 28% 6 14%


Of which by category


Of which by brand type (**)

Out of number of units

Chain store penetration(**) Out of frontage length Out of number of units

Rate of international retailers Out of frontage length

47%43%

13%12%




Footfall is per hour in peak time.

44 Milano Shopping

Via Montenapoleone is the epitome of Italian luxury fashion, with more than 70% of estimated frontage length occupied by single or multi-brand luxury and upmarket stores, and over 50% by an Italian brand. Recent openings include the new Burberry flagship store replacing men tailor shop Corneliani, as well as the Damiani and the Valentino flagship stores. As is also happening elsewhere in luxury high streets across Europe, retailers are more and more attracted by the proximity to other top-level brands. Also, the need to be highly visible and offer an unmatched shopping experience is leading towards larger sales areas. This

is what the size of recent openings seems to suggests, both in Italy (the new Burberry store is above 500 m2) and abroad (see for instance the new Miu Miu flagship store in New Bond street). These two trends may limit the ability of via Montenapoleone itself to host all those who may want a shop there, resulting in a strengthened position for surrounding streets, including via Verri. Historically there is also a trend of retailers choosing locations which are visible entering or exiting Via Montenapoleone itself, as is for instance the case of the historical Jil Sander store in via Pietro Verri and the forthcoming Just Cavalli in Corso Matteotti.

Via Montenapoleone

46 Milano Shopping

Via Montenapoleone, Distribution by retailer type and by unit size, % of total estimated

frontage in metres 2011


as of 09/04/2012

30%

46%

12%

6%6%

< 100

100 - 249

250 - 499

500 - 999

N.a.

20%

54%

16%

10%Foreign -International


Italian - Italy


Chain store penetration(**)Out of frontage lengthOut of number of units

Rate of international retailersOut of frontage lengthOut of number of units

77%76%

20%21%





Number of units

(*)


unitsTotal 478 82

Clothing 227 47% 36 44%Accessories 88 18% 15 18%Jewellery 84 18% 18 22%Books, Music, Toys & Gifts 4 1% 1 1%Local facilities 4 1% 1 1%Restaurants and Food 11 2% 1 1%Vacant 30 6% 4 5%Textiles & Soft Furnishings 26 6% 5 6%Telephones, Accessories & Electricals 4 1% 1 1%Other 9 2% 1 1%

< 100 146 30% 39 48%100 - 249 218 46% 32 39%250 - 499 58 12% 5 6%500 - 999 27 6% 2 2%N.a. 30 6% 4 5%





48 Milano Shopping

Corso Venezia is among the top three streets by level of brand, alongside via Montenapoleone and Via Manzoni. Hosting two Dolce and Gabbana stores Vivienne Westwood alongside Burberry Brits first European store and Prada, it is dominated by clothing and accessories as well as food and restaurants serving fashionistas and local workers alike. With just under a quarter of the estimated frontage length belongs to retail units above 1.000 m2 in size, and another 16% to units between 500 and 1.000 m2, Corso Venezia is only second to Corso Vittorio Emanuele II by presence of large sized units.

The Street is host to the first Italian COS store, opened in May, H&M’s higher end diffusion line. Such an opening confirms the Street’s appeal to National and International retailers with an established high-end and luxury position (or looking to establish one), in relatively large sized units.

Corso Venezia

50 Milano Shopping

Corso Venezia, Distribution by retailer type and by unit size, % of total estimated



as of 09/04/2012



63%61%

26%15%





Number of units

(*)


unitsTotal 317 66

Clothing 129 41% 27 41%Accessories 44 14% 11 17%Jewellery 10 3% 4 6%Eyewear 2 1% 1 2%Toiletries, Cosmetics & Beauty Products 3 1% 1 2%Books, Music, Toys & Gifts 3 1% 1 2%Local facilities 12 4% 2 3%Restaurants and Food 26 8% 7 11%Textiles & Soft Furnishings 55 17% 3 5%Leisure Services 5 2% 1 2%Other 9 3% 4 6%Next opening 2 1% 1 2%Vacant 17 5% 3 5%

< 100 100 32% 38 58%100 - 249 55 17% 10 15%250 - 499 38 12% 7 11%500 - 999 51 16% 6 9%>= 1000 73 23% 5 8%





32%

17%12%

16%

23%< 100

100 - 249

250 - 499

500 - 999

>= 1000

26%

29%

29%



Italian - Italy


52 Milano Shopping

With the large presence of Armani, alongside Valextra and Vertu among others via Manzoni has got the second highest incidence of luxury retail on the total estimate frontage length, totalling just under 30%. A new Armani Hotel, symbol of understated luxury made in Italy, opened in November 2011. With another 30% upmarket retail, the majority of the street is occupied by high-end retailers across all product categories. Despite such concentration of top quality brands the street is not attracting the expected footfall; it is possible that an urban environment which is less pedestrian friendly that that of other high streets in the area is contributing to quieter shopping flows.

Together with Corso Venezia, via Manzoni is also host to a greater variety of retail categories than Corso Vittorio Emanuele II and via Montenapoleone, with a large proportion of textile and soft furnishing outlets including Italian upmarket brands Artemide, Driade, Frette and Flou. It is also, with via Dante, the only high street with a reasonable children retail presence. The vast majority of units are below a 100 m2 in size and only three greater than 1.000 m2 (all held by Armani). The only unit between 500 and 1.000 m2 has been picked up by Hackett for its recently opened first Italian store.

Via Manzoni

54 Milano Shopping

Via Manzoni, Distribution by retailer type and by unit size, % of total estimated



as of 09/04/2012




63%54%

16%15%





Number of units (*)

% of total number of units

Total 510 91Of which by category:Clothing 180 35% 30 33%Accessories 40 8% 7 8%Jewellery 24 5% 7 8%Eyewear 2 0% 1 1%Toiletries, Cosmetics & Beauty Prod 13 3% 2 2%Books, Music, Toys & Gifts 4 1% 1 1%Local facilities 43 8% 4 4%Restaurants and Food 20 4% 6 7%Textiles & Soft Furnishings 97 19% 13 14%Leisure Services 20 4% 4 4%Children Wear & Nursery Goods 23 5% 5 5%Telephones, Accessories & Electr 6 1% 1 1%Other 14 3% 3 3%Next opening 10 2% 3 3%Vacant 15 3% 4 4%Of which by dimensional class (sqm):< 100 217 43% 52 57%100 - 249 148 29% 24 26%250 - 499 64 12% 7 8%500 - 999 4 1% 1 1%>= 1000 61 12% 3 3%N.a. 16 3% 4 4%Of which by brand type (**):Foreign - International 83 16% 14 15%Italian - International 196 38% 24 26%Italian - Italy 134 26% 35 38%Amenities/ Non-retail services/ Vac 98 19% 18 20%

43%

29%

12%

1%12%

3%< 100

100 - 249

250 - 499

500 - 999

>= 1000

N.a.

16%

39%26%

19%



Italian -ItalyAmenities/Non-retailservices/Vacant

56 Milano Shopping

Via Dante has seen substantial changes since its pedestrianisation in 1996, when the City Council realised its plan for a long boulevard from Corso Vittorio Emanuele II to largo Cairoli. From a retail point of view it is now effectively the prolongation of Corso Vittorio Emanuele II, benefitting from tourist flows between the Duomo and the Castello Sforzesco as well as from a healthy presence of shoppers and local workers. This broad potential demand is reflected in the fairly balanced mix of categories aiming to capture it, including a large food offer (the highest across the high streets considered, only second to Galleria Vittorio Emanuele II).The presence of International retailers is fairly substantial but not dominating, in line with most high

street considered, at around 22% of the total estimated 460 metres frontage length (including amenities). Le Coq Sportif will soon open its first Milan flagship store and Jacadi has just opened its own.The complementarity with Corso and Galleria Vittorio Emanuele II is confirmed by the fact that only five of the 15 International retailers in via Dante are also present in those two streets. In total, out of 55 retailers in Corso Vittorio Emanuele II, only 12 have also got a retail point in via Dante. Conversations with operators confirm that retail units in via Dante are appealing to retailers (footfall is the fourth highest following Corso Vittorio Emanuele II, Corso Buenos Aires and Via Torino), but a second unit in Corso Vittorio Emanuele II would be expected to cannibalise sales.

Via Dante

58 Milano Shopping

Via Dante, Distribution by retailer type and by unit size, % of total estimated



as of 09/04/2012




67%

22%25%





Number of units

(*)


unitsTotal 446 69Of which by category:Clothing 173 39% 23 33%Accessories 39 9% 8 12%Sport goods & Sportswear 5 1% 2 3%Jewellery 7 2% 2 3%Eyewear 4 1% 1 1%Toiletries, Cosmetics & Beauty Prod 32 7% 6 9%Books, Music, Toys & Gifts 24 5% 2 3%Local facilities 49 11% 6 9%Restaurants and Food 65 15% 10 14%Children Wear & Nursery Goods 27 6% 4 6%Telephones, Accessories & Electr 17 4% 3 4%Vacant 4 1% 2 3%Of which by dimensional class (sqm):< 100 146 33% 29 42%100 - 249 161 36% 25 36%250 - 499 55 12% 8 12%500 - 999 46 10% 4 6%>= 1000 36 8% 2 3%N.a. 2 0% 1 1%Of which by brand type (**):Foreign - International 96 22% 17 25%Italian - International 101 23% 15 22%Italian - Italy 130 29% 19 28%Amenities/ Non-retail services/ Vac 118 27% 18 26%

33%

36%

12%

10%

8% 1%

< 100

100 - 249

250 - 499

500 - 999

>= 1000

N.a.

22%

23%

29%

26%



Italian - Italy


60 Milano Shopping

The opening of FNAC in 2000 kick-started a second life for via Torino, bringing international high street retailers into what was more of an independent retail street and effectively turning its northern part into an extension of Piazza Duomo. Zara opened its second Italian store in 2004, and was followed by the opening of the second Muji store as well as the more recent Bershka and Pull & Bear ones. The latest Oysho opening confirms the appeal of the street to the large Spanish fashion group, as well as the eclectic retail offer of the street. There is a clustering of urban young fashion retailers, including the forthcoming Stradivarius, and there are rumours that another two international retailers in the same segment considering to enter the Italian market are looking for space in via Torino. However, Geox,

Vergelio and Marilena among others also have stores on the street, and there are rumours that a Zara Home will open soon, all catering for a more grown up market. Towards Largo Carrobbio the offer is less structured, with a small cluster of telephone and accessories shops.With the only development site in the whole of the study area, via Torino seems to be earmarked for further changes in the near future. Expected to be completed in two to three years, the development could deliver another 3.000 m² of retail space with high end specification which may appeal to retailers looking for large units (which have been shown to be relatively scarce throughout the nine streets analysed).

Via Torino

62 Milano Shopping

44%

23%

11%

13%

9%

< 100

100 - 249

250 - 499

500 - 999

>= 1000

25%

23%35%



Italian - Italy

Via Torino, Distribution by retailer type and by unit size, % of total estimated



as of 09/04/2012



64%49%

25%15%





Number of units

(*)


unitsTotal 809 117

Clothing 294 36% 35 30%Accessories 120 15% 25 21%Sport goods & Sportswear 36 5% 3 3%Jewellery 35 4% 5 4%Eyewear 14 2% 3 3%Toiletries, Cosmetics & Beauty Prod 39 5% 8 7%Books, Music, Toys & Gifts 56 7% 6 5%Local facilities 45 6% 3 3%Restaurants and Food 46 6% 11 9%Leisure Services 7 1% 2 2%Department & Variety Stores 39 5% 2 2%Children Wear & Nursery Goods 10 1% 1 1%Telephones, Accessories & Electr 23 3% 5 4%Other 5 1% 2 2%Vacant 39 5% 6 5%

< 100 353 44% 76 65%100 - 249 187 23% 21 18%250 - 499 90 11% 8 7%500 - 999 105 13% 8 7%>= 1000 73 9% 4 3%

Foreign - International 200 25% 18 15%Italian - International 190 23% 21 18%Italian - Italy 282 35% 55 47%Amenities/ Non-retail services/ Vac 137 17% 23 20%




64 Milano Shopping

Among the nine high streets analysed Corso Vercelli is the one with the most local shopping catchment. While this is arguably a common feature with the outer end of Corso Buenos Aires. Corso Vercelli’s retailer standing, however, reflects a wealthier catchment, with an old standing Cartier store and the historical Gemelli mini-chain of luxury clothing and accessories for man, woman and children. Indeed 15% of the streets estimated frontage length is occupied by upmarket or luxury single or multi-brand retailers, in line with via Dante and almost twice as much as the entire Corso Buenos Aires (8.2%).Corso Vercelli can be somehow associated to the wealthy villagey feel of, for instance, Marylebone High Street, the Notting Hill area and Hampstead High Street in London. These streets and Corso Vercelli

share some of the less mainstream high street brands, like Zadig & Voltaire, Comptoire des Cotonniers, and some of the concepts: Matches and Browns fashion in London and Gemelli and Brian and Barry in Milan. It is also, among those considered, the high street with the one of the lowest chain and international retailer penetration (second only to the Galleria Vittorio Emanuele II). With a high presence of amenities and non-retail services (including the Gloria cinema) it offers the wide range of facilities that are suitable to a mostly residential area. Its offer is increasingly complemented by via Belfiore, via Cuneo and via Marghera, which extend the shopping parade further to the west of the city. Also, the forthcoming CityLife retail precinct could further strengthen the attractiveness of the western and north western part of Milan.

Corso Vercelli

66 Milano Shopping

35%

20%

19%

13%

13%

< 100

100 - 249

250 - 499

500 - 999

>= 1000

Corso Vercelli, Distribution by retailer type and by unit size, % of total estimated



as of 09/04/2012



58%54%

16%17%





Number of units

(*)


unitsTotal 685 101

Clothing 206 30% 33 33%Accessories 46 7% 8 8%Jewellery 40 6% 11 11%Eyewear 5 1% 1 1%Toiletries, Cosmetics & Beauty Prod 51 7% 6 6%Books, Music, Toys & Gifts 10 2% 4 4%Local facilities 98 14% 6 6%Restaurants and Food 38 6% 7 7%Health & Beauty 2 0% 1 1%Textiles & Soft Furnishings 29 4% 4 4%Leisure Services 3 0% 1 1%Department & Variety Stores 49 7% 1 1%Children Wear & Nursery Goods 8 1% 2 2%Telephones, Accessories & Electr 45 7% 7 7%Vacant 55 8% 9 9%

< 100 238 35% 59 58%100 - 249 138 20% 20 20%250 - 499 129 19% 13 13%500 - 999 91 13% 5 5%>= 1000 90 13% 4 4%

Foreign - International 108 16% 17 17%Italian - International 131 19% 20 20%Italian - Italy 254 37% 41 41%Amenities/ Non-retail services/ Vac 193 28% 23 23%




16%

19%

37%

28%



Italian - Italy

Amenities/ Non-retail services/Vacant

68 Milano Shopping

Corso Buenos Aires is one of the longest high streets in Europe. With 281 retail units from Piazza Oberdan to Piazzale Loreto it is just below London Oxford Street’s 298 units. Among the nine Milan high streets considered it is also the one with the highest number of brands (217) and of brands with more than one shop (two H&M and two Foot Locker stores). The street has a strong high street vocation, with only Marilena and Vergelio representing multi-brand luxury accessories and luxury homewear Frette. There are however a number of upmarket brands, including multibrand Class, Guess, Liu Jo, Luisa Spagnoli and Furla among others. It is also the high street with the highest number of units above 500 m² in size, although the proportion of

the total estimated frontage length is much higher in Corso Vittorio Emanuele II (55%) and Corso Venezia (40%).Corso Buenos Aires is one of the most dynamic streets in Milan, with an initial part, towards Porta Venezia, with a reasonable touristic footfall thanks to both a City Sightseeing stop and a concentration of hotels in the part of the street between Porta Venezia and Piazza Lima. The outer end of the Corso has a relatively more local dimension. In general the broad range of potential customers from different age groups as well as ethnic background makes it a suitable area for new brands looking to appeal to a broad spectrum of Milan shoppers. This is for instance the case of Anthony Morato, Playlife and Havaianas.

Corso Buenos Aires

70 Milano Shopping

Corso Buenos Aires, Distribution by retailer type and by unit size, % of total estimated


22%

24%

28%

26%Foreign -International


Italian - Italy

Amenities/ Non-retail services/Vacant

24%

29%16%

14%

17%0%

< 100

100 - 249

250 - 499

500 - 999

>= 1000

N.a.


as of 09/04/2012




57%

22%16%





Number of units

(*)


unitsTotal 1999 281

Clothing 687 34% 90 32%Accessories 215 11% 41 15%Sport goods & Sportswear 95 5% 8 3%Jewellery 73 4% 20 7%Eyewear 31 2% 7 2%Toiletries, Cosmetics & Beauty Prod 94 5% 13 5%Books, Music, Toys & Gifts 55 3% 8 3%Local facilities 314 16% 19 7%Restaurants and Food 95 5% 23 8%Health & Beauty 6 0% 2 1%Textiles & Soft Furnishings 69 3% 7 2%Leisure Services 20 1% 6 2%Department & Variety Stores 31 2% 2 1%Children Wear & Nursery Goods 51 3% 7 2%Telephones, Accessories & Electr 68 3% 11 4%Other 10 1% 5 2%Next opening 3 0% 1 0%Vacant 83 4% 11 4%

< 100 481 24% 142 51%100 - 249 580 29% 74 26%250 - 499 325 16% 32 11%500 - 999 278 14% 17 6%>= 1000 330 17% 14 5%N.a. 4 0% 2 1%

Foreign - International 432 22% 44 16%Italian - International 491 25% 56 20%Italian - Italy 564 28% 122 43%Amen./Non-retail services/Vacant 512 26% 59 21%




73Milano Shopping

The research relies on a variety of data sources for macroeconomic and regional and local context. The bulk of the analysis is however based on primary data collected by Jones Lang LaSalle and Sincron Inova be-tween April 2011 April 2012. In particular:

• Footfall data was collected in two separate dates, 16/04/2011 and 22/11/2011 with the aim to minimise any on-peak bias14

• Data on high street units, including shop names, estimated frontage length and shop category was col-lected between 13th December 2011 and 9th April 2012.

Retailers have been classified by:• Typology of items sold, with separate entries for

next openings and vacancies and a residual category for unusual entries such as the Urban Centre, art gal-leries and Dianetics;

• Unit size range, with brackets including < 100 m², 100 – 249 m², 250 – 499 m², 500 – 999 m² and >= 1000 m²;

• Standing of the retailer, divided into High street, Up-market, Luxury and Luxury multi-brand. The classifica-tion was based on the JLL “Glitter & glamour shining

brightly report” on luxury retailing in Europe, as well as on a case by case assessment of each retailer. A further Amenities/ Non-retail services/ Vacant category was created to group all local amenities (e.g. banks, bars) as well as non-retail services (such as Dianetics) and vacant units;

• Whether the retail unit is part of a chain or is an independent one, based on a case by case analysis of brands and assuming that a chain includes a minimum of three retail units across the world;

• The brand’s nationality, so for instance Bulgari is recorded as an Italian brand despite it being part of the French LVHM group since March 2011;

• The geographies in which the brand can be found, i.e. whether it can be found in Italy only or also abroad, in stand-alone shops, flagship stores or shop in store ones (e.g. a shop in shop at Harrod’s).

The prime rent is the EUR price per sqm and year of a sustainable rent that can be achieved for a newly let notional ideal space in an absolute prime location. Such an assumed unit is characterized by a sales area of 100 to 200 m2, stair-free ground-floor access.

Methodology

14 The footfall count was carried out by Jones Lang LaSalle.

Footfall is counted at the most heavily frequented point of the

location. The survey for this report was carried out at several points

on peak hours average Saturday. Pedestrians were counted during

the above period at 5-minute intervals. Only pedestrians

passing left to right were counted for the first five minutes, and those passing right to left for the following five minutes. A

5-minute break was made after each 10-minute block to offset

fluctuations caused by traffic lights or public transports.

74 Milano Shopping

The shop frontage length is calculated in linear meter and includes not only the windows on the main street analysed but also those on the side walls. It is estimat-ed by measuring the number of feet of each frontage, a foot equalling 0.65 metres.

In the tables summarising the key facts for each high street the following applies:

• (*) 100% includes vacancies• (**) foreign indicates a retailer with headquarters

outside Italian boundaries; International vs Italy indi-cates a retailer operating on the international or Italian market only.

• (***) percentage of chains out of grand total, includ-ing vacant units and local amenitiesThe data in the maps was last updated as per the schedule below. Notable openings have been then included when identified until 09/04/2012. Any later opening has been recorded in the main text of the re-port but is not reflected in the maps.

Street Latest thorough update* Via Montenapoleone 13/12/2011* Via Manzoni 13/12/2011* Corso Vittorio Emanuele 26/10/2011* Galleria Vittorio Emanuele 13/12/2011* Corso Venezia 26/10/2011* Via Dante 13/12/2011* Via Torino 12/12/2011* Corso Buenos Aires 06/02/2012* Corso Vercelli 13/12/2011

While all information is provided to the best of our knowledge, we assume no liability for the correctness of the information.

Francesca CattagniRetail AgencyMilan+ 39 02 85 868 [email protected]

Elena Di BiaseResearchMilan+ 39 02 85 868 [email protected]

www.joneslanglasalle.comwww.joneslanglasalle.itwww.sincron-inova.it

COPYRIGHT © JONES LANG LASALLE IP, INC. 2012. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.Printing information: paper, inks, printing process, recycle directive.

Milano Shopping - June 2012

In collaboration withPictures by Marialuisa Pastò and layout by Carolina Mauri

milano shopping - · pdf filethe jll guide to high street retail real estate in milan milano...

Documents