Paris generates 2,5 billion euros in luxury street rents

Paris is well worth a mass... and its commercial rental rates are twice the total rental value of all of Italy. The excitement around next July’s Olympic Games has intensified an already competitive market. In one of the world’s most popular cities for tourism and international shopping, luxury and sportswear brands have been competing fiercely, often with staggering contracts, to secure the best locations and maximum visibility.

It all starts with the Champs-Élysées, the prime stage for the Olympics, where surging demand has driven rents to sky-high levels, with positive ripple effects across the Golden Triangle and other shopping destinations in the city. France’s most iconic avenue, about 2 kilometers long, is the crown jewel of Parisian shopping streets. According to estimates from Scenari Immobiliari for MFF, these streets generate nearly 1.9 billion euros in annual rent, far surpassing Milan’s nearly 500 million euros. Of that, 755 million euros come from the Champs-Élysées alone, which boasts 60,000 square meters of commercial space. The other major streets include Rue Saint-Honoré (360 million euros), Boulevard Haussmann (305 million euros), and Avenue Montaigne (295 million euros). If rents from secondary streets like Boulevard Saint-Germain, Rue de Rivoli, and Rue des Francs-Bourgeois are included, the total climbs to 2.5 billion euros in annual rents, spanning 17.5 kilometers of shopping streets and nearly 454,000 square meters of retail space.

«Paris is ready for the Olympics, with a particularly vibrant commercial scene. A noteworthy example is a retail space on the Champs-Élysées that hit 22,000 euros per square meter per year. This exceptional case, recorded in the first quarter of 2024, essentially doubled the 11,500 euros for average rents in 2023, which had remained stable compared to 2022. This move was driven by the desire to be on the most famous street with the highest visibility during the Games, along with a shortage of available spaces. Apart from this exception, average rents on the avenue have reached an average peak of 19,000 euros», Francesca Zirnstein, Director General of Scenari Immobiliari, explained to MFF. Major events like the Olympics act as catalysts for economic growth, creating opportunities at every level.

«The next challenge is to maintain the visibility and attractiveness of the city in the medium to long term, much like Milan did after Expo 2015. This extends to commercial rents and transactions as well. However, the French capital has an edge with its approximately 44 million annual tourists, substantial local population, and central role in the country», Francesca Zirnstein added. Scenari Immobiliari does not believe the soaring rents seen during the Olympics fully reflect the Parisian retail real estate market, as they are driven by an excessive mismatch between demand and the actual availability of supply.

«It is unlikely that we will see 22,000 euros per square meter per year for a shop on the Champs-Élysées again. However, this transaction has set higher rental expectations, leading us to anticipate a recovery to the pre-Covid average of 14,400 euros in the near future. It is also important to note that vacancy rates are low, with occupancy rates approaching 100%. To take over a space on the avenue, you either have to wait for the lease to expire or buy out the current tenant», Federico Rivolta, Head of Feasibility Studies and Special Projects at Scenari Immobiliari, explained. «The rental values we identify may differ from other estimates because we give different weight to more recent leases, acknowledging that they do not always reflect the broader market», he added.

Regarding high street rental rates, Avenue Montaigne, with peak averages of 15,000 euros, is the top performer after the Champs-Élysées. Next are Rue Saint-Honoré (14,000 euros), Rue du Faubourg Saint-Honoré (13,000 euros), with higher appeal at its initial section, then Place Vendôme (7,750 euros), an iconic Parisian location home to major luxury brands, and finally Boulevard Haussmann (6,500 euros). «For secondary streets, Rue des Francs-Bourgeois leads with a maximum rent of 5,000 euros, followed by Boulevard Saint-Germain (4,500 euros) and Boulevard Saint Michel (3,750 euros), which, thanks to the Olympics, could attract new tourist flows. Rue de Rivoli (2,700 euros) is quite long, with some highly trafficked sections that create certain issues, while Rue Royale (1,300 euros) may draw renewed interest in areas closer to the high streets», Rivolta continued.

However, it is not just rental rates that are making waves in the heart of Paris. In 2023, several real estate deals caught the retail sector’s attention. For instance, Kering, the luxury conglomerate, acquired two buildings in the Golden Triangle: the space at 35-37 Avenue Montaigne, with 8,300 square meters, acquired for 860 million euros, is set to become a flagship store for Saint Laurent; and the building at 235 Rue Saint-Honoré, with 8,000 square meters, purchased for 640 million euros, where a Gucci store is slated to open in 2025. Meanwhile, Lvmh acquired the building at 101 Avenue des Champs-Élysées for 770 million euros, home to the largest store of its flagship brand. «This confirms Paris’s renewed appeal, a city synonymous with luxury, marking a new wave of attraction for retail investors», Federico Rivolta concluded.

 Dover Street Market set to debut in the Marais

 Paris is eagerly anticipating the opening, scheduled for May, of the new Dover Street Market, designed by Rei Kawakubo and Adrian Joffe. The space will open in the heart of the Marais, at 35-37 Rue des Francs-Bourgeois, and as previewed on doverstreetmarketparis.com, «DSMP is not just a shop». It will be much more than a store. The historic building will house not only a retail space but also areas dedicated to art, communication, and community, as well as offices and showrooms for brand development. Based on the idea that «connections are at the heart of humanity», the Paris concept is likened to a helix: «a schematic representation of various interconnected activities forming an integrated whole».

At the flagship store, collections from Comme des Garçons will likely be available, as well as avant-garde brands, emerging talents, and established luxury labels that define Dover Street Market’s unique offering. This opening in the French capital also marks the 20th anniversary of the multibrand retailer, which was founded in London in September 2004. Currently, there are six Dover Street Market locations worldwide: in London, Tokyo/Ginza, New York, Singapore, Beijing, and Los Angeles. The seventh location is set to open in Paris, where the only existing Dover Street Parfums Market, dedicated to fragrances and beauty products, is also located. (All rights reserved)