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Italian luxury fashion house Versace opens in Collins Street

Upmarket Italian ready-to-wear powerhouse Versace has set up shop in Melbourne's Collins Street, taking space next to another European luxury brand, Gucci.

Versace will open its first stand-alone Australian store – the brand has a flagship shop in Westfield's Sydney mall – in US property group Pembroke Real Estate's T&G Building at 161 Collins Street.

Collins Street has cemented its position as the city's upmarket shopping mecca after a string of luxury leasing deals.

Fendi will open at 85 Collins, Van Cleef has set up shop at 101, Gucci and Bottega Veneta will be in 161, Berluti is at 175, Burberry and Hour Glass are in 257, and Mercedes Benz has opened its Mercedes Me store at the base of the Rialto Towers.

Pembroke chief executive Matthew Knight said the building's refurbishment focused on improving the retail presence in Collins Street to attract A-list tenants.

"It was a bit broken up before," Mr Knight said.

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"We were selective in who we spoke to. We knew there would be a number of brands after that space. It was important we put the right brand in."

Mr Knight said the Collins Street leasing market was strong, and space was in short supply. "Tenants are looking every day for opportunities and there's not a lot around."

CBRE's Zelman Ainsworth, Tan Thach and Ting Ting Gao brokered the Versace deal.

"Global retailers from services to fast fashion and luxury groups are attracted to Australia as they see this market as untapped and yielding consistent sales results for retailers who have already entered the market," Mr Ainsworth said.

Pembroke has been busy with a major refurbishment of the T&G building, upgrading the office space and ground-floor retail areas.

It purchased the 1930s-era building, one of Collins Street's best-known properties, for $275 million in 2015, even though major tenant KPMG had committed to occupying 20,000 square metres in billionaire Lang Walker's Collins Square development in Docklands.

Pembroke signed professional services giant Accenture this year to take nearly 8000 sq m on a 10-year lease.

Tech giant Google is understood to be setting up its first Melbourne home in the remaining space in the building along with multinational sportswear brand Nike and co-working firm Regus Spaces.

When asked about those potential tenants, Mr Knight said: "That's not confirmed. We're not speculating on that today."

The heritage building's refurbishment is expected to be completed next year.

It will have 43,000 sq m of A-grade office space on 10 levels, with campus-style floor plates of up to 4000 sq m.

Pembroke almost doubled a corner retail space for existing tenant Gucci and lured sister brand Bottega Veneta into another 300-odd sq m shop.

Versace will next take a 307 sq m shop between Gucci and Bottega Veneta. Rents in the street commonly are about $4000 per sq m.