While Oak Street flounders with record vacancies in the wake of the global luxury recession, adjacent Rush Street is coming into its own as a shopping strip for the rich and fabulous.

Leading the charge is a striking new Hermes flagship at Oak and Rush streets that is drawing the nucleus of Chicago's high-end fashion energy west to Rush. In June, the Parisian salon best known for its $375 silk scarves and $10,000 Birkin bags moved from Oak's dead zone near the shuttered Esquire Theater, where it resided since 1989, to the intersection of the old and new luxury streets.

Oak Street isn't alone in the upheaval riling exclusive shopping strips around the world, and the shakeup has raised questions about how relevant marquee streets like Rodeo Drive or Madison Avenue are to a new generation of luxury consumers.

The Ladies Who Lunch who frequented Oak Street salons in the 1990s are stepping aside for their sons and daughters, who are just as happy to buy a pair of $995 Jimmy Choo gladiator sandals from the designer's Web site or — better yet — find them on sale at burgeoning online shopping clubs such as Gilt Groupe, Ideeli or HauteLook.

"The younger customer is key here," said retail consultant Dawn Mello, who has held posts at the top of the luxury world as president of Bergdorf Goodman and creative director at Gucci. "That's who's open to new ideas and new merchandise."

Unlike past spurts of economic turmoil, the wealthy felt the tremors of the Great Recession. And the aftershocks have left them skeptical about designer prices and more willing to venture off the beaten track in search of well-crafted luxury goods.

The shift in attitude is helping Rush Street appeal to luxury houses that a decade ago saw the road as little more than a back alley to the Magnificent Mile and a thoroughfare to the Near North bar scene.

"More and more retailers are considering Rush as a location for luxury or better fashion," said Lorraine Adney, director of the Midwestern region for the McDevitt Co., a retail real estate firm. "People who before this point in time had not viewed Rush Street as luxury are now taking a second look and saying this could be another option."

The Marc Jacobs Collection, which has a reputation for pioneering into new luxury territory, spurred the Rush Street renaissance earlier this year when it opened a dramatic outpost at Rush and Walton streets in the swanky Elysian Hotel. Chandeliers dangling from the 20-foot ceilings through the large picture windows bring a palatial bearing previously unfamiliar to the street.

French shoe designer Christian Louboutin, known for sky-high pumps with trademark red soles, has been looking at space on Rush Street for its first Chicago store. And British tailored-clothing store Ted Baker is moving onto Rush around the corner from Prada.

The secret about luxury houses is that even though they want to be exclusive, they don't want to stray too far from the pack, say real estate brokers. The more luxury retailers that find a home on Rush Street, the more will follow.

Since opening June 1 at Rush and Oak across from Barneys and Prada, Hermes has seen its Chicago sales increase "dramatically" from a year ago, said Robert Chavez, CEO of Hermes in the U.S.

"What was surprising is the enormous level of increased walk-in traffic," Chavez said. "There are a lot more walk-ins and tourists due to the corner location."

Designed by the French firm of the late architect Rene Dumas, the new Hermes salon touts a spiral staircase, oversized windows and an artisan's table ready for a craftsman to arrive in 2011 to handle leather repairs. At 7,000 square feet, the store is twice the size of its former Oak Street digs, and it has enough room to showcase Hermes saddles, riding boots and equestrian clothing that harken back to Hermes roots in 1837 as the purveyor of harnesses and bridles for European noblemen.

Even though Hermes is drawing new traffic off Rush Street, the old luxury firm retained an Oak Street building number — a sign the "right address" still carries weight in a world where image reigns.

Oak Street rose from the ashes of the Chicago Fire of 1871 to become an enclave for prominent and wealthy Chicagoans. The one-block strip between North Michigan Avenue and Rush Street drew the attention of French and Italian designers in the 1980s and 1990s when American architect Stanley Tigerman helped redesign the street.

Led by cosmetics maven Marilyn Miglin, who first set up shop on the street in 1963, Tigerman created an ambiance of an intimate European boulevard with charcoal gray sidewalks, trees surrounded by decorative grating and vintage street lamps.

But in the past three years, the downturn in luxury spending combined with a failed plan, conceived at the height of the real estate boom, to turn the 1930s-era Esquire Theater into a hotel and shopping complex has left Chicago's exclusive shopping street with a global-size recession hangover.

The strip of European-style town houses is dotted with vacant storefronts and "for rent" signs. The homegrown independent boutiques — Ultimo, Marilyn Miglin, Chasalla and Sugar Magnolia — that gave the street its Chicago character moved out. French fashion house Yves Saint Laurent discreetly pulled up stakes without so much as a goodbye, and French crystal-maker Baccarat backed out of highly anticipated plans to open in the empty Miglin building.