Oscar de la Renta is the latest designer to see opportunity on Melrose Place, the two-block strip in West Hollywood that has become prime retail real estate in less than two years.
De la Renta’s 4,000-square-foot, two-level flagship — his first in the Los Angeles area — is to open on Feb. 1 in a space formerly occupied by designer Tracy Feith. He will join Marc Jacobs, a pioneer who launched his store on Melrose Place in March 2005, when there was nothing to lure the paparazzi.
The low-key vibe was to be short-lived.
Alice Temperley opened in October 2005, followed by Carolina Herrera’s 3,800-square-foot West Coast flagship in July, which introduced a more grown-up sensibility to the street.
Now, the momentum has picked up. Monique Lhuillier is relocating her store on Santa Monica Boulevard in Beverly Hills to a 4,400-square-foot corner space scheduled to open in March. Chloé is to launch a 2,658-square-foot boutique next year and the U.K.’s Mulberry plans to open a shop in December.
Still, the street, located off La Cienega Boulevard and near boutique-thick Melrose Avenue, is a work in progress. There isn’t much foot traffic, or parking. Tracy Feith didn’t respond to requests for comment about closing.
“Melrose Place is half the [per square foot] price of Rodeo Drive, but people may be doing half the business,” said retail real estate agent Chuck Dembo, co-owner of Dembo & Associates. “That’s the trade-off. The international tourists are going over to Beverly Hills and now Robertson Boulevard — the traffic on Melrose Place is more local.”
Jay Luchs, retail real estate agent at CB Richard Ellis, who placed Temperley on Melrose Place at $10 per square foot, said: “You have fewer sales, but higher-volume sales there. It’s going to take time. The street is in the process of being lined up with names. Right now, there are six or seven major names on a street that has 30 stores. Over time, there’s a chance that the street will change. You don’t have foot traffic there yet, so as of now, it’s based on the targeted customer spending lots of money.”
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The street “is definitely getting some interest from the Rodeo Drive set,” Luchs said. “Being there is one way to try to be edgy but still high-end, like in SoHo or the Meatpacking District in New York.”
Regarding sales, Jenny Le, manager of the 1,200-square-foot Temperley store, said, “It’s still a bit quiet, but I think it’s going to pick up. In the last year, there’s been a greater sense of awareness that [the street] is here.”
Alex Bolen, chief executive officer of Oscar de la Renta, said a big motivation for opening on Melrose Place was to avoid clashing with the company’s wholesale customers. “We have a very strong business in L.A.,” he said. “My concern is…we don’t want to open a store that will pull traffic from our wholesale accounts. But I don’t think the [Melrose Place] shopper is the same person that shops in department stores, anyway.”
Collections in the Oscar de la Renta store will fan out over the 3,000-square-foot ground floor, which will comprise a series of spacious rooms and a landscaped interior courtyard. The 1,000-square-foot second floor, accessible from an outside rear staircase, will likely be for VIPs.
A desire for discrete access for high-profile clients — coupled with a need for four times the selling space — prompted Lhuillier’s relocation. “There’s a back door and sectioned-off room for VIPs in the new space,” she said. “Right now, we don’t have enough room to take all the appointments for our trunk shows. Now we’ll be able to accommodate all that. I think the service will even be stepped up, because now the alterations will be on-premise.”
Lhuillier said she expects sales to double. “We looked in Beverly Hills and nothing felt right,” Lhuillier said. “Melrose Place had the charm and elegance, and we like how it’s tucked away. It’s a very special street.”
Dembo said the factors involved in the rise of the thoroughfare are basic. “We had a good economy for four to five years, so more people were looking for space, and the rents are high in Beverly Hills and on Robertson Boulevard, with low vacancy. It’s also the…mentality — everyone just follows.”
Dembo said rents have tripled in the past two years, to around $15 per square foot for smaller spaces. He estimated prices for larger spaces, such as those of Herrera, Lhuillier and de la Renta, at about $10 per square foot. Rents on Robertson Boulevard range from $12 to $15 per square foot, and on Rodeo Drive they hover around $30 per square foot.
“Robertson has received a lot of publicity, so the tourists are going there, as well as Beverly Hills,” he said. “It hasn’t really flowed over there. But in the future…I see the dots being connected from Robertson Boulevard and Melrose Place [the districts are roughly three-quarters of a mile apart].”
The foot traffic doesn’t concern Bolen. “We will manage the store as a destination,” he said. “If the street becomes a more pedestrian street, we’ll get our share of the business. But that’s not what we’re counting on.”
Lack of foot traffic on Melrose Place has been largely attributed to its dearth of parking, which is limited to meters. Both Rodeo Drive and Robertson Boulevard have underground garages.
Still, the demand for retail space on Melrose Place has spurred some extravagantly priced buyouts. An owner of a store that recently opened on the street, who asked to remain anonymous, said he was offered tens of thousands of dollars to walk away from a hard-won spot.
“There’s a bidding war everywhere here,” said Le at Temperley. “We get people all the time asking if this space is for rent or for the contact for our landlord.”
Dembo said competition is so tight that landlords are able to pick and chose. “Some landlords are looking for branded tenants,” he said. “You can have a really great, creative person with good financing, and the landlords are probably not going to select that person because they’d rather go with someone that has a name or a following.”
The pieces of the Melrose Place puzzle may still be in motion, but its anonymity has been shed. At a recent fashion event, actress Michelle Trachtenberg, dressed in a Monique Lhuillier cocktail dress, extended her congratulations to the designer after hearing about her move. “You know, the only thing about Melrose Place is, the paparazzi are really bad,” she said. “Really, really bad.”