Savvy fashion and food corporations are steadily entering the realm of real estate developers. That is thanks to the growing number of cases in which buildings that house "hip" (keen on the latest trends) content from the retail sector rise in value.
According to the retail industry on the 25th, LF Corp.'s food subsidiary LF Food will open the brunch restaurant "Maison de Gourmet" in Sinsa-dong, Gangnam-gu, Seoul, in Mar. Maison de Gourmet is a space that showcases to consumers the premium ingredients imported by Gourmet F&B, which merged with LF Food. Diners can enjoy everything from jambon-beurre with Isigny butter to dishes using top-tier caviar.
LF Corp. purchased a building in Sinsa-dong, Gangnam-gu, Seoul, last year for about 40 billion won for this space. Typically, to maximize revenue, a company leases a space to run a restaurant and then buys the building once the business hits its stride; at first glance, the order here is reversed.
There are several reasons for this. The biggest is that LF Corp.'s Maison de Gourmet can be categorized as an anchor tenant, and ultimately, an anchor tenant is seen as likely to lift a building's value. A real estate industry official said, "LF probably had some confidence in Maison de Gourmet's ability to draw crowds." Ultimately, if it can raise the building's value, there is no need from the start to do a good deed for "someone else's building."
Another reason is that Maison de Gourmet previously operated a food-ingredient retail shop on Rodeo Street in Apgujeong-dong, Gangnam-gu, Seoul, which to some extent proved its business viability. An LF Food official said, "We are opening the new Maison de Gourmet, and in the process we are preparing a variety of spaces, including a restaurant."
LF Corp. is not alone in this move. Among retailers, Musinsa is the most renowned as a real estate developer. Since 2019, Musinsa has focused on acquiring properties across Seongsu-dong, Seongdong-gu, Seoul, to build Musinsa Town.
A representative case is the former Dongbu Automobile Service site at 271-22, Seongsu-dong 2-ga. Musinsa bought the site for 22 billion won and developed it into Musinsa Campus E1. It is an office building with a total floor area of 10,533 square meters, and it was sold to Mastern Asset Management for around 115 billion won. It was a sale-and-leaseback structure with Musinsa committing to a 15-year lease. A real estate industry official said, "Even after the sale, Musinsa participated as an investor with equity and carefully captured the spread from the building's value appreciation."
In the past, the byword for maximizing building value was luxury companies. Global luxury brands Prada and Miu Miu are prime examples. The Prada Cheongdam store building in Gangnam-gu, Seoul, transacted last year at 1.3 billion won per 3.3 square meters on a total floor area basis and 4.32 billion won per 3.3 square meters on a land area basis. The total sale price was around 55 billion won. The Miu Miu building transacted in Oct. 2024 at 960 million won per 3.3 square meters on a total floor area basis and 4.37 billion won per 3.3 square meters on a land area basis. These are representative cases where luxury tenants moved in and the building price jumped sharply.
Recently, a line in a drama reflected this mood. In the Netflix original drama "Lady Dua," released this month, the owner of a building on Cheongdam-dong's luxury strip says this to the Korea head of a luxury handbag brand used by the top 0.1% by asset:
"Worried about popup (temporary store) space? I'll lease it cheap, so come into our building. Move in and raise the building price for me. The location is excellent. Look."
In the real estate industry, there is talk that the era of the building owner who holds title, as in the past, seems to be over. There used to be the joke "above the Lord stands the building owner," but now it is an era in which the content that fills a building has become more important.
Shin Ji-hye, an executive director at STS Development and author of the book about people who transform spaces to raise value, "The players who make hot places," said, "Now, above building owners are hot-place makers," and noted, "Capital gains from building sales have shrunk, and in many cases it is hard to cover loan interest with rent alone, so how you create content in a building has become more important."
Because these are corporations that generate revenue by selling consumables to eat, wear, and drink, they apparently have a keen sense of what content people like. Attention is on how much fashion, food, and retail companies will show their capabilities in the real estate market going forward.