By focusing on the key fundamentals at a micro-location level, curating the right mix of uses and occupiers and taking a proactive approach to asset management, Meyer Bergman has created value at one of Italy’s premier retail destinations. Here, RLI speaks with Peter Evans, Vice President at Meyer Bergman to learn more about one of the company’s key projects.
With Milan sitting alongside London, Paris and New York as one of the world’s fashion capitals, it is no surprise that one of its best-known streets boasts the highest concentration of clothing stores on a single road in Europe. At 1.4km, Corso Buenos Aires is Italy’s longest shopping street.
High levels of Latin American immigration in the early 20th century led to the avenue being renamed after the Argentinian capital, and also help explain the names of a nearby metro station and the street’s main public square: Lima and Piazzale Argentina. Today, Corso Buenos Aires attracts people from across the globe, drawing over 100,000 visitors a day on average.
It was these fundamentals – proximity to transport links and high footfall – that encouraged Meyer Bergman, one of Europe’s leading private equity real estate managers, to first examine investment opportunities there. “We tend to look at locations that share the same underlying fundamentals: great footfall, strong transport links; local landmarks; and high levels of growth and disposable income,” explains Peter Evans, Vice President at Meyer Bergman. Corso Buenos Aires is home to no less than three metro stops, as well as the Milano Porta Venezia underground railway station, and is just a stone’s throw away from Milan Central station – a key entry point for tourists visiting the city. Milan, the capital of the wealthy Lombardy region, is also the richest metropolitan area of Italy in terms of GDP per capita, according to the OECD, helping explain the city’s ability to support such a density of retail, including many premium outlets and luxury brands.
As a vertically integrated investment business, Meyer Bergman’s focus is on creating new landmark destinations through carefully tailored asset management strategies. The firm has always been focused on sourcing off-market deals and has advised three closed-ended, value-add real estate funds and a number of co-investments to date, with a total of €7.5bn of assets on behalf of global institutional investors. One such example of this nimble approach is Meyer Bergman’s €250M Corti Segrete and Corso Buenos Aires 59 project, where the firm has created 166 apartments above nearly 8,200sq m of retail space across four interwar-era buildings. Backed by a €117.5M loan from M&G Investments, Meyer Bergman has successfully repositioned what was a derelict, failed retail scheme and outdated residential into an attractive mixed-use development. “We are only halfway through construction and a vast majority of flats are reserved, and we are already in discussions with a number of retailers who are looking to access a prime location on one of not just Milan’s or Italy’s busiest shopping streets, but Europe’s,” Evans says.
To take advantage of sitting right by one of Italy’s most high-profile shopping destinations, Meyer Bergman transformed the internal courtyards into new retail space. “Before we got involved the site was little more than run-down buildings home to failing craft shops, with dark courtyards hidden from the wider pedestrian traffic,” Evans explains. The courtyards will be transformed to create three new floors of retail space over the basement, ground and first-floor levels. Meyer Bergman will create six large, high quality units that will be attractive to high-profile tenants, particularly those with large space requirements. “A lot of quality brands have realised the next generation of homeowners won’t travel the distance to more remote locations to buy their goods and so are looking to increase their presence in urban areas,” Evans says.
“There is a lack of large surface areas in downtown high streets such as Corso Buenos Aires that would be suitable for this type of occupier’s requirements and this is where we saw an opportunity,” he continues. A few hundred metres towards the city centre sits another Meyer Bergman project, Corso Buenos Aires 33-37, where the firm is also actively working to reposition an existing asset to attract a broader range of tenants. The length of Corso Buenos Aires stretches across the price-point spectrum, with luxury brands located closer to the city centre and more mid-market offerings at the other end. This resulted in Meyer Bergman taking a different approach to space at Corso Buenos Aires 33-37. “We bought a large retail unit and are in the process of refurbishing and subdividing it into smaller, attractive spaces for the type of tenant that would likely be interested in them, as well as lowering the floors to be at street-level,” Evans explains.
From Oslo to London, Meyer Bergman is taking a similar approach to its assets, picking micro-locations that are only supported by strong fundamentals and where there is the opportunity to create value from repositioning, whether that is overhauling space or introducing new uses. “Cities are extremely resilient, but tastes change quickly. So, we need to be nimble and be able to respond to occupiers’ changing needs – whether that is in offices, retail or residential,” Evans concludes.