Chanel buys a building on the exclusive Avenue Montaigne in Paris

Chanel has bought a building on Avenue Montaigne, a prominent shopping destination in Paris, as European luxury brands rush to secure prime real estate for their boutiques.

The fashion brand known for its tweed jackets and skirts bought the property at 42 Avenue Montaigne, a block from the Champs-Elysees, according to a statement, which did not disclose the terms of the transaction.

Chanel already has a boutique in the building, and there is another Chanel store at 51 Avenue Montaigne. Italian insurer Generali was the seller, according to people familiar with the matter, who asked not to be identified discussing private information.

The acquisition of 42 Avenue Montaigne follows other property purchases made last year in Paris and cities such as London and Biarritz, Chanel said in the statement.

Owning a store can protect a retailer from ever-rising rents and make it easier to justify the significant expenditure required to outfit boutiques and turn them into destinations where big-spending customers want to spend hours shopping. Luxury companies, notably LVMH Moet Hennessy Louis Vuitton SE, have invested heavily to transform boutiques into art and dining destinations.

LVMH opened its Christian Dior flagship store at 30 Avenue Montaigne more than two years ago, housing a museum, restaurant, guest suite and gardens. It worked with renowned architect Peter Marino, who has also worked on retail projects for Chanel.

The company “would never have opened a boutique like 30 Montaigne for Dior in Paris if it had rented the space,” LVMH Chief Financial Officer Jean-Jacques Guiony told Bloomberg earlier this year. “If we own it, it allows us to have a different vision.”

Avenue Montaigne is a prime destination for luxury shoppers, some of whom stay at the exclusive Plaza Athénée hotel, where nightly rates reach €2,500 ($2,780) or more.

Chanel's property portfolio is currently worth more than $7 billion, with a significant portion of it acquired in the past 10 years, a company official said. The firm plans a major renovation of the boutique at 42 Avenue Montaigne beginning in 2029, a person familiar with the matter said.

Groups ranging from Kering SA, the owner of Gucci, to Prada SpA have also made eye-catching property acquisitions over the past year.