The renovation of the Fondaco dei Tedeschi in Venice represented a grand experiment. Should an ancient building in the midst of a world heritage site be transformed into a modern mall for luxury goods? How best to achieve the transformation and make it economically sustainable? For nearly 800 years, the building has stood near the Rialto Bridge on Venice’s Grand Canal. It was a key nexus of trade – German merchants brought their goods to exchange for luxuries from local artisans and the Near East. As Venice waned as a commercial center, the building was transformed, finally ending up as a headquarters of the Italian postal system. Much of the internal space was converted to offices, but the external architecture and the magnificent courtyard remained the same.
In the 2000s, the Poste Italiane decided to move out. The Benetton family saw an opportunity. The family, known primarily for the global fashion business that bears its name, were also significant real estate and infrastructure investors. They were invested both financially and emotionally in the fate of Venice. They believed that private capital should develop and preserve Venice, and commercial interests could transform historic sites to modern uses, particularly retail. There were many in the City of Venice both in the government and in the population, who were dubious.
Venice’s rise as a tourist destination had brought a variety of reactions from the populace. Many Venetians objected to this transformation. But after dealing with local opposition and placing many restrictions on development, the City of Venice and the Poste sold the Fondaco to the Benettons for €61 million.
The Benettons brought on OMA to renovate the building. The Dutch architectural firm, headed by Pritzker-winner Rem Koolhaas, had to transform a centuries-old building into a modern showcase for high-end goods. They also needed to incorporate private retail into a space in which the public would feel welcome. The resulting design brought escalators within the building, created an open plaza for cultural events, and, controversially, opened up the roof for visitors. The Benetton group then contracted with DFS to operate the mall. DFS brought an intimate knowledge of the tourist trade, but could this help them stock the mall with the proper mix of goods? Would tourists walk to the mall? And would they buy or just look? Would the mall become economically viable? What could each stakeholder learn from their experiences with the Fondaco dei Tedeschi?
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William Goetzmann, Jean Rosenthal, Jaan Elias, Edoardo Pasinato, Lukas Cejnar, Ellie Campion,"Fondaco dei Tedeschi, A New Luxury Shopping Destination for Venice," Yale SOM Case 17-020, November 9, 2017
- Real estate
- Business History
- Innovation & Design
- Sourcing/Managing Funds
- State & Society
This Yale School of Management Case has been made possible by the generous support of the William J. Poorvu YC ’56 Fund.