When fast-fashion retailer Fashion Nova was searching for a new headquarters, the pull of Beverly Hills was strong.
The city is one of the world's luxury capitals, and its palm tree-lined streets are home to billionaires, Hollywood stars and high-end brands including Gucci and Dior. Compared with Fashion Nova's current base in Vernon, a gritty, heavily industrial spit of land southeast of downtown L.A., the glitz of Beverly Hills offered the upgrade that founder and Chief Executive Richard Saghian wanted.
“Mostly all our celebrity partners, influencers, our employees, vendors, they all live and work around Beverly Hills,” Saghian said. "Plus, it's close to where I live and I think it's great for the brand."
This month, the 43-year-old billionaire closed a deal on a contemporary office building at the edge of the city's real estate "golden triangle." He paid $118 million in cash for the property at 407 N. Maple Drive.
Celebrities including Cardi B and Megan Thee Stallion have helped boost Fashion Nova's appeal as the company has produced low-cost, trendy clothes that offer women a way to tap into the latest fashion trends at a fraction of the cost of luxury brands.
Founded in 2006, Fashion Nova was ahead of the curve when it came to harnessing influencer marketing. As it cements its place in an upscale neighborhood of Beverly Hills, the brand continues to bet big on social media and star power.
The stakes are high in the relentless world of fast fashion as competition with other industry players heats up, most notably with Shein, a Singapore-based juggernaut that is growing its presence in the United States and releases new clothes at a breakneck pace. Shein also has operations in Los Angeles.
Read more:Cardi B makes fashion moves again with Vernon-based brand Fashion Nova
Neil Saunders, managing director at data analytics and consulting firm GlobalData Retail, said Fashion Nova will need to find ways to keep pace with Shein, which "has really just upped the tempo and it's very cheap."
"That's definitely pulled a little bit of market share and spending away from some of the more traditional and more established players."
The fast-fashion industry has become crowded with retailers such as H&M, ASOS, PrettyLittleThing and Forever 21 competing for sales that have stagnated as shoppers have pulled back on spending amid high inflation. Publicly traded companies such as H&M and ASOS have seen their sales drop this year.
"There's no doubt the market has become a little bit more challenging," Saunders said. "People have cut back slightly on the amount of things they buy because of pressures on their budgets."
Fashion Nova, which is privately owned, has annual sales of approximately $2 billion and 40 million followers on social media, according to a news release about the new office space.
Over the years, the fast-fashion industry has also faced concerns about sustainability and cheap labor. Still, for many consumers, price and style are at the top of their minds, Saunders said. With consumers buying from various brands, there's room for more than one retailer to dominate, he said.
Fashion Nova's new office space is one way the brand is strengthening its relationship with celebrities and influencers in Los Angeles. The company is planning to open an invitation-only Nova Social Club — where creators, influencers, celebrities and VIP guests can collaborate — and a Nova Founders Lab to help emerging brands, designers, creatives and founders.
"If there's a celebrity that wants to, for example, start a brand, we can partner together," Saghian said.
The 175,000-square-foot building, purchased from real estate company Tishman Speyer, features an atrium sky bridge, a solarium, Zen-like gardens and an outdoor terrace. The retailer plans to add a fitness studio, a wellness spa, a cosmetic micro-treatment bar and other amenities.
Fashion Nova's new headquarters for its more than 500 employees is scheduled to open later this year. Even as remote work becomes more popular, Saghian said interacting in the office is key to the brand's success and growth.
Read more:So who bought L.A.’s 'The One' mega-mansion? The owner of Fashion Nova
Properties in the Beverly Hills area were selling for almost double the price a few years ago, Saghian said. The office building on Maple Drive wasn't on the market, but Saghian said he made a compelling case with an all-cash offer.
The purchase is among the priciest office transactions this year for Beverly Hills, CoStar data show. Offices in that area typically sell for $344 per square foot; Saghian paid about $674 per square foot for the building. In 2005, Tishman Speyer paid more than $70.7 million for the building, so the purchase price represents a nearly 67% sales premium. The city's office vacancy rate is 16.1%, above the national average of 13.8%.
Saunders said it's a smart move for a brand like Fashion Nova to put its headquarters at the heart of where fashion and style are in California. Influencer marketing is just one piece of what entices people to buy clothes.
"Consumers will look at influencers and they'll take cues from them, but the products have to be good, the designs have to be good, the price points have to be right," Saunders said.
Fashion Nova has five brick-and-mortar stores in Southern California, including at the Shops at Montebello and the Northridge Mall. The brand has adapted to the rise of e-commerce, launching its online store in 2013 and releasing a shopping app.
The company isn't done growing. The brand plans to expand in other cities including London, Hong Kong, Sydney and New York.
Saghian has snapped up other luxury real estate in Los Angeles. In 2022, he purchased “The One” megamansion for $141 million.
"I've always viewed real estate as a long-term, generational investment, and I just think it's a great place to invest," he said. "And why not purchase when the market's down, you know?"
Times staff writer Roger Vincent contributed to this report.
This story originally appeared in Los Angeles Times.
