Rodeo Drive Retail Property Sells for $110 Million, Double the Purchase Price from 24 Hours Earlier

by Katie Sloan

Beverly Hills, Calif. — A subsidiary of Paris-based LVMH has purchased a 6,200-square-foot retail building at 456 N. Rodeo Drive in Beverly Hills for $110 million. Just one day earlier, Palm Beach, Fla.-based Sterling Organization purchased the same asset for $55 million from The Karl B. Schurz Trust.

According to a news release, an intermediary had approached LVMH, parent company of Louis Vuitton, to lease space at the property, but the luxury goods conglomerate expressed interest in acquiring the space instead. The sale equates to roughly $17,750 per square foot and a net gain of approximately $55 million for Sterling and its institutional investor partners in its Sterling Value Add Partners II fund.

The property is located in the Golden Triangle, between Santa Monica Boulevard and Brighton Way.

Rodeo Drive is home to luxury retailers such as Louis Vuitton, Chanel, Celine, Hermes, Ralph Lauren, Hugo Boss, Vera Wang, Salvatore Ferragamo, Versace, Tiffany & Co., Gucci, Cartier, Fendi, Givenchy, Loro Piana, Rimowa, Prada and Burberry.

“On the West Coast, it’s all about those three, high-value blocks of Rodeo Drive where the world’s premier luxury brands must have a presence by planting their flag,” says Brian Kosoy, president and CEO of Sterling. In contrast, he says luxury retailers in New York have plenty of viable options.

A Wall Street Journal article reports that LVMH already owns Celine-occupied 319-323 N. Rodeo Drive and Bijan-occupied 420 N. Rodeo Drive, which it purchased in 2012 and 2016, respectively, according to data from Real Capital Analytics.

In an era when retail property values have been falling and store closures are well documented, this sale is indicative that investors are still willing to pay the price for prime retail space. Rents range from $500 to $800 per square foot on Rodeo Drive, ranking among the highest in the nation, according to Sterling.

Sterling is a vertically integrated private equity real estate firm that focuses on investing in value-add retail real estate assets and grocery-anchored shopping centers in major markets across the United States.

LVMH was founded in 1987 under the merger of fashion house Louis Vuitton with spirits company Moet Hennessy. The company controls around 60 subsidiaries, with Christian Dior being its main holding company.

— Kristin Hiller

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