Luxury, digitally native and athleisure retailers are driving demand in existing and emerging prime urban corridors.
That’s according to JLL’s just-released City Retail 2023 report, which found that office occupancy remains down 48% and international visitors are down 66% from 2019 levels in cities like New York and San Francisco.
The stagnation is leading luxury and pricey clicks-to-bricks retail tenants to enliven new prime urban retail corridors in major metros nationwide.
“Go where the people are” is the prime finding of the JLL report and, in many cases, it’s causing a boom in warmer towns such as Miami, which experienced 9.5% retail rent growth in the third quarter.
In 2022’s third quarter, Miami’s apartment rents rose 17.3%, compared to 10.2% in New York, 9.2% in Chicago, and 7% in San Francisco.
The flood of migrants — some of them employees of top companies such as Goldman Sachs and Blackstone that have increased their office footprints in South Florida — are causing longstanding prime urban retail corridors to fill and new ones to flourish. The report noted that while some of these emerging corridors, such as Williamsburg in Brooklyn, have always been buzzy, new residential developments and substantial shifts in work preferences have expedited their rise to prominence.
Miami’s Design District is one beneficiary. Chanel has opened one of the 15 new stores it’s opened in the United States since the onset of the pandemic there. Mike Amiri expanded his Los Angeles-based Amiri brand to the Design District, as well as to SoHo in New York.
New York itself has seen new prime corridors blossom. While Loewe and Louis Vuitton moved into new spaces in SoHo, Gucci chose a different course and moved into the Meatpacking District.
Luxury accessories retailers have been expanding as well, with Rolex opening stores in Washington, D.C., and Chicago. Patek Philippe opted for Miami and Boston’s Newbury Street in Boston instead.
Hermès opened a new store in Brooklyn’s Williamsburg section this year just after establishing a new flagship on Madison Avenue. Also flocking to Williamsburg in 2022 were Glossier, H&M and Showfields. The retail migration, said the JLL report, “all but cemented the neighborhood as a premier retail destination in New York City.”
Digitally native tenants are also packing growing prime urban corridors. Not willing to pay SoHo rents that have risen by 5% year-over-year in 2022’s third quarter, many digitally native tenants redirected expansion plans to cities such as Philadelphia, Washington, D.C., and San Francisco, JLL reported. Walnut Street (Philadelphia), M Street (D.C.), and Hayes Valley (San Francisco) offer comparable foot traffic to SoHo and as for rents that are as much as 40% less.
Digital native jewelry brand Gorjana took space in Philadelphia and DC this year, and the jewelry DTC brand Mejuri opened in the Marina in San Francisco, Fulton Market in Chicago, and on Abbot Kinney in Los Angeles.
Other new prime urban retail corridors flourishing across the country, according to JLL, are Studio City and Ventura Boulevard in Los Angeles, and King Street in Charleston.