From hippies on acid trips to Kanye West on his shopping sprees, Toronto's Yorkville neighbourhood has been a magnet for urban thrill-seekers for decades. But there's new buzz in the 40 acres north of Bloor Street West between Yonge Street and Avenue Road. Not only are Chanel, Dior, Hermès and Jimmy Choo building new flagships, but property developer First Capital Realty has sunk $600-million into the ongoing retail evolution of the tony area.

Sure, some are grumbling about too much construction with new condo projects bringing almost 10,000 more residential units to the Bloor-Yorkville quadrant in the next few years. But for shopkeepers, bar owners and restaurateurs, density means dollar signs. "We love it," says David Markowitz of Davids Footwear boutique. "There's vibrancy, sophistication and disposable income."

As an independent fashion retailer, Davids Footwear has stood at the corner of Bay Street and Bloor Street since 1971 and is a rare breed in the area. The $300-per-square-foot rent that Yorkville's southern border, Bloor Street, now commands is peanuts for international brands such as Gucci or Hermès, which pay exponentially higher rates for their New York and London locations. But the soaring values have pushed many sole proprietors off Bloor Street or out of business altogether. And it's the little guys – risk takers with imagination and guts – who often give a neighbourhood character.

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When Markowitz's parents Louis and Julia opened their retail location on Bloor Street, modelling their shop after a Gucci store they had seen in New York, the rent was $27.50 per square foot. There were no international luxury boutiques on the strip. Designer names were just starting to catch on and were stocked at multi-brand shops like Creeds, Harridges, Sportables and Holt Renfrew, which had a small store near Avenue Road.

Yorkville during carnival in aid of St. Lawrence Centre for the Arts, September 2, 1965. Harry McLorinan/The Globe and Mail

The area was still in transition from what local Ian Wookey calls, "a class B slum." His late father, Ian Richard Wookey, bought up so many Yorkville rooming houses at the end of the 1960s that he became known as "the Squire of Yorkville." The family moved into a home on Hazelton Avenue. "The Vagabonds were here with their big motorcycles parked at the end of the street and they would wave to me when I came home with my Upper Canada College jacket and tie on," Wookey says from his office in a former welding shop behind Mindham Fine Jewellery. "None of my friends' parents would let them visit. One of our tenants was a photography studio; then we realized it was nude photography; then we realized there was no photography and it was a body-rub place."

Go-go girls danced in the window of the Mynah Bird and speakeasies and communes gave the area the eclectic feel of another iconic Toronto area, Kensington Market. "I used to come here as a kid on Friday and Saturday nights," says Joel Carman, owner of Over the Rainbow, a denim store on Yorkville Avenue. "You couldn't walk because there were people singing folk music on the street.

If you wanted to really impress a girl you brought her to Penny Farthing, the Left Bank, the Riverboat, the Purple Onion, the Patio – they were all coffee houses where you could listen to a folk singer and play some chess, because the drinking age then was 21." Those folk singers included Joni Mitchell Neil Young, and Bob Dylan.

The property around the location of the University Theatre has been through a few rounds of reinvention. Its next renaissance includes the Hermès Canadian flagship. THE GLOBE AND MAIL

In 1975, Carman was driving a cab when he met Peter Jackman, who had a small alteration business in the Lothian Mews, an open-air retail complex accessible from Bloor Street. "When 450 sq. ft. came up on the second floor, we decided to open a clothing shop," Carman says. Rent for the space, which faced onto Cumberland Avenue, was $300 a month. Carman eventually bought his partner out and moved to a larger location. "Business was booming with lineups on a Saturday. It was a happening place."

Art galleries, hair salons, interior decorators and chic cafés started moving in and Ian Richard Wookey, along with wealthy French grain merchant William Louis-Dreyfus, created Hazelton Lanes. The elegant mini-mall, which boasted a winter skating rink in its central courtyard, opened in 1975 with Courregès, Hermès, Roots and Ralph Lauren.

Legendary boutique owner Catherine Hill filled her Chez Catherine windows with Gianfranco Ferré and, later, Armani, Dior, Versace and Valentino. "Designer names were beginning to carry weight," says Wookey, who handled leasing for the Lanes. That trend snowballed through the '80s and '90s when Chanel, Prada, Gucci and other luxury labels flocked to Bloor bringing more traffic.

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"It brought awareness to what luxury prices are, and more spending," says Markowitz, whose selection at Davids includes Valentino, Manolo Blahnik and Giuseppe Zanotti. "For the longest time we were the most expensive footwear resource on the street. We had top prices of $650 or $700. Then Prada, Louis Vuitton and Chanel came along with shoes that were $1,000 and $1,200. All of a sudden $650 wasn't the top end, but still a wonderful shoe."

The luxury brand invasion of Bloor Street is now extending north, deep into the heart of Yorkville. "Chanel was a game-changer," Greg Menzies, executive vice-president of First Capital Realty, says of the deal that will put Chanel into 98 Yorkville Avenue, the original site of Mount Sinai Hospital. "Anywhere Chanel goes to or leaves, they change the neighbourhood. We suddenly had a lot of calls from fashion houses. We realized we were onto something."

First Capital has 180 shopping centres across Canada, but Hazelton Lanes, which the company purchased in 2011, is the only one where fashion dominates. The mall has been renamed Yorkville Village and new additions include Belstaff, Eleventy, Galerie de Bellefeuille and a concept store by TNT. SoulCycle, Chase Hospitality Group's Palm Lane and celebrity chef Max Brenner's Alternative Café are adding to the lifestyle offerings already anchored by Whole Foods Market.

First Capital has also nabbed three levels of retail and parking at One Bloor East, which Nordstrom Rack and a Mark McEwan grocery store will eventually occupy. And in keeping with its strategy of amassing property near its mall investments, the company oversees numerous sites on both sides of Yorkville Avenue. Demolition has already begun on some, with stores for Jimmy Choo and other plush names set to rise from the rubble.

Bloor Street West (aka The Mink Mile) began catering to luxury shoppers when retailers such as Creeds opened on the strip. THE GLOBE AND MAIL

Even though Menzies assures, "We don't want to sanitize the street and create a Rodeo Drive full of uber brands," some independent owners are skeptical about Yorkville's latest reinvention.

Linda Perisa, for instance, carries fashion-forward European brands like Dries Van Noten and Haider Ackermann at her store, 119 Corbo – a favourite of Kanye West who pops in to shop for wife, Kim, whenever he's in town – but she isn't convinced Toronto can support all this high fashion. With the boom in online shopping and the addition of two Saks Fifth Avenue and two Nordstrom department stores to the city, "the numbers don't add up," Perisa says.

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For his part, Carman isn't sticking around to find out. Next year he'll move out of 101 Yorkville Avenue (which is slated for demolition by First Capital) to the nearby Manulife Centre where Over the Rainbow will have an eagerly anticipated new neighbour: the Italian gourmet grocer and restaurateur Eataly.

He worries that "overbuilding" Yorkville will force out the galleries, opticians, cool little restaurants and, perhaps most significantly, hair salons. "Hairdressers are very important to the area because people come down to have their hair done, they have lunch, they shop," Carman says. "If you take that away, there's going to be a void. If you don't have service, you don't have traffic. The traffic can't just be for buying clothing. It's got to be for living." Markowitz, on the other hand, likens the changes on Yorkville Avenue to "a mall expanding with a new wing."

Menzies says First Capital is mindful of creating a mix of spas, food offerings and more, so the area maintains its vibrancy. And in researching Yorkville's past back to its horse-and-buggy days, his team realized a unique feature of the area is the network of pathways between and behind stores, many of which are underused. That could change, with one possibility being a tree-lined walkway behind the Hazelton Hotel connecting Hazelton Avenue to the Yorkville Village mall.

"The future is very bright," Wookey says. "It's a very intelligent thing First Capital has done. It's what we did – buy as much as you can to create change."

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