New York jeweler Fred Leighton is planning its first Los Angeles store for Rodeo Drive. In September, MaxMara will expand its one-story boutique to a two-story space down the block. That's all surprising given the city's current refrain: complaints about a sagging box office, soaring gas prices, staggering soy latte costs. But it's nothing compared with the changes taking place across town.

At a time when it's rumored that the Los Angeles locations of big retailers like Barneys, Neiman Marcus, and Saks Fifth Avenue cut their fall orders in half, one neighborhood is seeing a luxury-boutique boom.

On Robertson Boulevard, a little east of Rodeo, a Chanel accessories store opened in June, selling silver-chain-strap handbags, nail polishes named for L.A. locations, and exclusive ballet flats. An outpost of New York's trend-aware Intermix boutique opened last fall. Large Dolce & Gabbana and Ralph Lauren signs announce stores in progress. Designer Phillip Lim just opened a freestanding shop—his third in the world—near Santa Monica Boulevard. Around the corner, bag maker Balenciaga's space-age emporium, which opened in March, has been bustling.

Down the road on Melrose Place, new boutiques from Ports 1961, Monique Lhullier, and Sergio Rossi attract a celebrity clientele. Catherine Malandrino's Maison Malandrino is prepping an August arrival. Whispers abound that brands such as Lanvin and Chloé want to neighbor up with Marc Jacobs, Marni, and the new Alexander McQueen boutique, which sells $4,000 dresses and $700 gladiator sandals.

But driving the growth is not simply selling clothing and accessories to Los Angeles women, say local real estate and retail insiders.

"The new L.A. luxury retail boom isn't just for locals," says Jay Luchs, a senior vice president specializing in fashion retailers in Los Angeles for CB Richard Ellis. "It's about having a retail fixture in Hollywood—it's about show, and like Hollywood, it's about image."  

Los Angeles—and particularly this neighborhood—offers designers increased exposure to celebrities (and the celebrity media), which can mean improved sales of lower-priced products to the masses, sometimes over the internet rather than in the shops.

"My L.A. shop is a way of infiltrating Middle America," Alexander McQueen admitted at the May opening of his Melrose boutique. "My friend Sarah Jessica Parker told me New York has nothing to do with America—and L.A. effects it quite a lot. So this store is here to help us launch e-commerce in America."