Mike Kemp/In Pictures via Getty ImagesLuxury powerhouse LVMH is investing billions in real estate, The Wall Street Journal reported.The company's strategy involves purchasing older properties and creating new city centers.The company spent $2.1 billion last year acquiring properties in Paris ahead of the Olympic games.Louis Vuitton Moët Hennessy, the brand behind some of the most well-known names in fashion, wines, and spirits, is reshaping older neighborhoods across the globe into luxury plazas and shopping centers.According to The Wall Street Journal, the parent company of brands like Louis Vuitton, Dior, and Fendi, as well as private equity firm L Catterton, is betting billions on in-person shopping by buying old shopping centers, hotels, and warehouses and turning them into mixed-use centers focused on their brands.According to the report, much of the strategy involves buying property in sometimes historic neighborhoods — like the Pont Neuf neighborhood in Paris, which sent lawsuits LVMH's way from historians concerned about the integrity of the 150-year-old La Samaritaine department store — and transforming them into affluent neighborhoods by working with world-class architects like Frank Gehry to construct shopping centers.Michael Burke, head of LVMH Fashion Group, told the Journal, "We're creating a city.""We take something that does not exist and when we're done a city center has been created with the residential, retail, and cultural aspects to it," Burke told the outlet. "Most of our brands were brands that had fallen on hard times. Just like this real estate, we bought it because it was derelict. In ruins." The "derelict" real estate includes areas like Miami's Design District, where the company turned 30 acres of warehouses and abandoned office buildings into a luxury space with museums, offices, and — of course — a retail center. Over 14 years, LVMH and a local developer took over blocks of the warehouse district. Now, asking rents for retail space in the area have increased by 200% since 2019, the Miami Design District said in a blog post, citing investment management firm JLL.Burke told The Journal that the company's introduction to the world of real estate was in 2010 when he convinced CEO Bernard Arnault to revitalize the warehouse district in Miami. The company now has multiple sites in other cities internationally, including Paris and Montreal. According to the Journal, the company spent $2.1 billion last year acquiring properties in Paris ahead of the Olympic games.The luxury brand is among several spending billions on luxury stores and experiences. Kering, the company behind Gucci and Saint Laurent, spent $1.4 billion on a building in Milan's Via Montenapoleone.Chanel and LVMH are also interested in purchasing properties on New York's Fifth Avenue and the Champs-Élysées in Paris, the Journal reported.The large-scale purchases are not without their controversies, however.In Paris, The New York Times previously reported, luxury giants buying up property in the Marais district of Paris are contributing to the displacement of low-income immigrant businesses."This used to be a real neighborhood, with families and kids," Amar Sitayeb, a mini-mart owner, told the Times of the Marais district. "Now, all that's disappeared."The Journal also reported that residents in Montreal, where the company has poured $1.5 billion into a mixed-use luxury shopping center called Royalmount, are apprehensive about the development's effect on the city's already established downtown. The Royalmount replaces a historical industrial site.Global News Canada reported in 2019 that the project is estimated to increase car traffic by between 20,000 and 70,000 cars daily. The company responded by building a footbridge that connects the shopping center to Montreal's public transit network."Without proper planning and without transportation alternatives integrated and implemented, is almost like a recipe for chaos," Saint-Laurent Borough Mayor Alan DeSousa told Global News at the time.LVMH did not immediately respond to a request for comment from Business Insider.Read the original article on Business Insider
