JLL: Urban retail recovering; retailers moving in include …
Retailers in sectors that have seen outsized gains from U.S. consumers are capitalizing on the favorable market for tenants that exists in most urban corridors. That’s one of the key takeaways from JLL’s City Retail 2022 report, which found that home goods, athleisure and outdoors retailers are taking the lead in urban leasing. The report also found that while landlords are still open to negotiation, pandemic-related concessions such as percent-sale rent are increasingly harder to come by.
Here are a few of the companies moving into the nation’s urban corridors.
Activewear/Outdoors
• Vuori, a direct-to-consumer activewear brand with a $4 billion valuation, plans to open 100 stores in the U.S. over the next five years. Vuori opened on Abbot Kinney in Los Angeles this past summer next to a handful of other DTC brands.
• Lululemon opened a pop-up-turned-permanent store also on Abbot Kinney and expanded its location on Robson in Vancouver.
• Alo Yoga will be moving into The Superette, a new Seaport development in Boston. Developed by WS Development, The Superette will open by summer 2022 with 40 stores, restaurants and entertainment venues built around a central courtyard.
Outdoor clothing retailers have also been busy.
• Arc’teryx opened three stores over the past year and a half: along West 4th in Vancouver, in Union Square in San Francisco (one of the only 2020 deals in the corridor) and in SoHo in New York City.
• Icebreaker, an outdoor clothing retailer that specializes in merino wool, relocated to North Michigan Avenue in Chicago.
• Blocks away in the Gold Coast corridor, Wilson Sporting Goods opened its first brick-and-mortar location this past summer. The company opened its second store in Manhattan’s SoHo neighborhood in late January.
[Read More: First Look: Wilson Sporting Goods celebrates sports, play at NYC flagship]
Home Goods
• Joybird, a DTC home furnishings retailer, has opened several stores over the past year including on Melrose in Los Angeles and is expected to move into the former Williams-Sonoma location in the Marina in San Francisco.
• Avocado Green Mattress moved onto M Street in Washington, DC. The Sill, which began as an online plant delivery business and now has physical stores in five cities, opened on Newbury Street in Boston in the fourth quarter of 2021
Lease Negotiations: Back to business
Throughout 2020, landlords made concessions unheard of on prime urban corridors, according to the report. Rents came down and more months of free rent were given. There were also far more lease covenants, increased tenant improvement allowances, kickout clauses and shorter terms.
However, as rent collection improved in late 2020 and into 2021, percent sales and rent relief agreements have become rarer, the report noted. While rents haven’t returned to pre-COVID levels in most corridors and markets are still tenant-favorable, it is (mostly) back to business in terms of traditional lease negotiations. Incentives still exist, especially for the first year, terms are shorter, pandemic language exists — but many of the drastic concessions are 2020 history, JLL reported.
The JLL report can be downloaded here.