JLL: U.S. remains a top luxury market, brands favor malls, prime corridors
Despite economic uncertainty, the United States remains a top global luxury market.
Luxury global retail sales reached over $75 billion in 2023, according to a new report by JLL. The the U.S. and Europe accounted for for the largest shares of the market, with both comprising roughly 28% of overall luxury retail sales. Global luxury retail sales expected to see a compounded annual growth rate of 1.9% from 2024 to 2028, surpassing $82 billion by the end of 2028.
In total, luxury brands leased over 360,000 sq. ft. in the U.S. from July 2023 to July 2024. Almost half (48.5%) of new luxury stores opened in mallS. Street retail accounted for 48.5% of openings. Hospitality and “other” accounted for the remaining space.
Malls
For cities such as Costa Mesa (California) and Atlanta, the wave of new luxury openings in top-performing malls like South Coast Plaza and Phipps Plaza reflects how luxury brands continue to find opportunities in malls, which accounted for nearly half of all new luxury store openings from July 2023 to July 2024.
“As the scarcity of desirable retail space in prime corridors continues to impact the expansion plans of luxury brands, top malls with ample high-quality space will continue to provide opportunities,” the report stated.
Street Retail
New York City and Los Angeles continues to attract interest from luxury brands seeking to establish or expand their presence in the U.S., the report noted. Both markets accounted for a combined 36.9% of new luxury openings between July 2023 and July 2024.
In New York City, the resurgence of Madison Avenue is in full swing as luxury brands take the opportunity to snatch up ample retail space while they can, the report noted. The new luxury openings in the Los Angeles market reaffirm a key fact: Luxury lives in Beverly Hills.
[READ MORE: JLL: Holiday budgets up this year, but gift spending to fall; mall visits to rise]
Street retail accounted for 40.9% of new luxury openings from July 2023 to July 2024, with nearly 68% in prime corridors. Prime corridors in New York City include Madison Avenue (47.1% of all openings), SoHo, Fifth Avenue and the Meatpacking District, with notable openings ranging from Valentino to Chanel to Breitling. In Miami’s Design District, the openings included Gucci, Dior, Tiffany & Co. and Cult Gaia.
Other key findings from JLL’s “Shaping luxury’s future: Trends in U.S. luxury real estate” report are below.
•While the Tapestry – Capri Holdings merger faces FTC scrutiny, recent merger & acquisition activity involving retailers such as Saks Fifth Avenue will shape the future of luxury retail.
•As international arrivals to the U.S. recovers to 2019 levels by the end of 2025, luxury retail can benefit from travel growth through partnerships with the hospitality industry.
•While inflation and the lack of supply will continue to impact luxury retail, luxury brands must find ways to appeal to the younger and more diverse consumer who will drive luxury spending in the future.
•Luxury brands are buying real estate in prime corridors, relocating to better locations, and are expanding existing footprints to better establish themselves and form connections with consumers.
