LVMH’s new path to people’s hearts (and pockets) is through sprawling real estate empires in New York, Paris, and Miami

LVMH is a luxury mammoth in every sense of the word.

While it’s known for shiny bags, perfumes, and apparel, the Bernard Arnault–owned company also wants skin in the game when it comes to entire global shopping districts.

Whether that’s in legacy sites like New York’s Fifth Avenue and Paris’s Champs-Élysées, or the recently revitalized Miami Design District, the French conglomerate has real estate investments across the board—either directly or through its private equity arm, L Catterton.

The goal? To make sure it can hold on to its presence where people spend the most. LVMH’s investments in real estate have been ticking up—in 2023, the Christian Dior owner set a new record for its real estate investments, hitting roughly €2.45 billion ($2.62 billion).

“All roads lead to real estate,” Michael Burke, head of LVMH Fashion Group, told the Wall Street Journal, adding that the most valuable luxury company is creating a city of its own through its controlled properties.

In Miami, where LVMH has pumped money into the Design District through L Catterton, the French company’s sway is unlike any other—whether manifest in the area’s tenants or even the local artwork.

What’s common to most of these shopping areas is that LVMH’s brands—from Tiffany & Co. to Louis Vuitton—are located side by side with its luxury industry competitors. That’s the point, Burke said.

“If we don’t have the competitors, we don’t have a new city,” said Burke. “We take something that does not exist, and when we’re done a city center has been created with the residential, retail, and cultural aspects to it.”

Fashion companies have driven other big real estate purchases in recent times. Just take Gucci owner Kering—it just shelled out €1.3 billion ($1.4 billion) on a new store location in Milan, where LVMH’s Italian café brand Cova is also located. The company also snapped up property in New York worth $963 million earlier this year. LVMH has been in talks to buy another prime property in New York, for which it’s battling other luxury houses like Chanel.

Luxury companies are facing a challenging time as people pull back on spending relative to the COVID-19 boom. It’s been a sluggish path to recovering that since.

Now, there’s finally light at the end of the tunnel, which has prompted luxury behemoths to bet on in-person shopping experiences. Data on Europe’s 16 luxury streets saw a near-complete recovery in the average rent as of mid-last year, according to Savills.

“There is an appetite from brands to be in city centers to enhance their visibility to a greater number of customers, taking advantage of the strong resurgence of footfall on Europe’s key shopping streets,” Larry Brennan, head of European retail agency at Savills, said in a note in November.

The desire to reach more customers by being on the most famous and popular streets in the world is undoubtedly part of the reason luxury brands are buying up property—but it’s also just more economical to be their own landlord, given that rents can be astronomical in prime shopping areas.

“We try to secure and buy the best possible locations for our companies,” Arnault said on an earnings call in January.

This story was originally featured on Fortune.com