The Pedder Building, where Abercrombie & Fitch will debut in Hong Kong
The retail market in Hong Kong continues to boom, and since space is a precious commodity in the notoriously jam-packed city, a real estate battle recently broke out between Hong Kong's very own Shanghai Tang and the American casualwear brand Abercrombie & Fitch. After the dust settled, Abercrombie & Fitch emerged victorious, though rent for the location -- smack dab in the middle of the city's Central district -- rose 250 percent, to HK$7 million (US$900,000) per month.
From Sing Tao Daily (Translation by Jing Daily team):
According to sources, the current tenant Shanghai Tang’s lease is about to expire, and the owners, the Fok family, opened the property to bidding a few months ago, immediately gaining several brand inquiries. Last month saw two brands enter a final bidding stage, with the American brand Abercrombie & Fitch and a French label owned by the Swiss luxury Richemont Group, which also owns Shanghai Tang, entering into a bidding war. Previously, the Richemont Group was thought to be the favorite, due to the many years Shanghai Tang leased the premises, but A&F offered more than its competitor, who, in the end, had to give way.
Defeating the French and Swiss Richemont Labels
It is understood that the site will serve as A&F’s launching pad into Hong Kong, and the brand's management company took particular care to promote its appeal. The shop is located in the well-known Pedder building, a designated grade-two historic property which is not only attractive, but also boasts a large space appealing to foreigners. Unlike any other space in the Central district, A&F's determination to win its bidding war pushed the monthly rent to HK$7 million, about 2.5 times higher than the current monthly rent of about HK$2 million.
The site includes a 6,300 square foot ground floor and a 6,400 square foot basement, for a total of 12,700 square feet, making rent an average of about HK$551 per square foot. Unsuccessful bidder Shanghai Tang has started to look for new sites, increasing the market demand.
As for Shanghai Tang, a legendary shop set up by Hong Kong businessman David Tang in 1994 with an investment of HK$120 million that recruited 12 of Shanghai’s best tailors, successfully selling China’s handmade cheongsams and Tang suits to foreigners, they were acquired in 2000 by the world’s second-largest luxury group, the Swiss Richemont group, which owns Cartier, Dunhill, Piaget and other top brands.
Soared over 2.5 times the old rent
Located at 29 Pedder Street in the Central district, the seven-storey Pedder Building was built in 1924 by the British firm P&T Construction, Engineering and Architecture firm, and features an arched porch, column arcades and carved decorations. The patriotic deceased businessman, Henry Fok and friend John Tang acquired the building in 1962 in a HK$5 million joint venture, and currently, the Fok family and Tang family are the holders of the property.
The most recently recorded major lease was the “Toy King” Wellington Street shopping plaza lease, with a monthly rent of HK$3.4 million. New tenants include the Standard Chartered Bank (HK$2.7 million per month) and a club (HK$700,000), which marks an 80-90 percent rise in rent.
Considering Abercrombie & Fitch's popularity in the China market (which has overlooked the brand's notorious 2002 t-shirt controversy) despite its lack of a mainland China location, it is interesting that Sing Tao thinks the new Hong Kong location will "appeal to foreigners." Most likely, upon the store's opening we'll see hordes of mainland tourist-shoppers jamming its 12,000+ square feet, looking to get their hands on flip-flops and Americana-lite sweatpants.