Retail Is Not Dead On These 5 U.S. Streets
While things may seem bleak for retail, various retail corridors around the world are commanding high rents, attracting new retailers and remain popular among shoppers and investors.
New York City’s Upper Fifth Avenue has the highest annual rent around the world at $3K/SF, followed by Hong Kong’s Causeway at $2,725/SF and London’s New Bond Street at $1,720/SF, according to a report from Cushman & Wakefield. The Main Streets Across the World report tracks 451 top retail streets and ranks the most expensive in 68 countries by prime rental value.
“Despite a lot of negative headlines, global retail remains as dynamic and vibrant as ever in response to technological and demographic change across the world,” Cushman & Wakefield head of Europe, Middle East and Africa (EMEA) Retail Research Darren Yates said. “The most innovative retailers are combining their online and physical platforms to create a seamless omnichannel experience for the customer, but profile and location play such a crucial role in the premium retail experience.”
In the U.S. many similar dynamics are in play and locations along cities' main streets remain highly desirable.
“In the U.S., while there has been a lot of discussion around store closures, the main high street markets have not been as adversely affected as some of the headlines might suggest,” Yates said. “The fact is that most retailers are not turning their backs on high street locations.”
Check out the top retail streets in the Americas below:
Upper Fifth Avenue, New York
2017 Rent: $3K/SF
2016 Rent: $3K/SF
Upper Fifth Avenue between 49th and 60th streets boasts not just the highest asking rents in the Americas, but around the world. Asking rents were stable year-over-year, but are 20% higher than they were five years ago.
The retail environment in New York is particularly competitive and many brands in Manhattan often set the pace for retail around the world, according to Cushman & Wakefield Executive Managing Director and head of Retail for the Americas David Gorelick.
“We know that international luxury brands will continue to look to high streets to support their plans for expansion — and as retailers search for new opportunities to connect with consumers, the market will undoubtedly respond in ways that leverage the unique overlap between the retail, industrial and e-commerce sectors,” Gorelick said.
The food hall concept is expanding rapidly throughout Manhattan. A 28K SF specialty market from the Cipriani family will provide a retail anchor at the residential development Two Waterline Square. Trader Joe's also plans to expand into 432 East 14th St. in the East Village within a proposed residential development.
The retail outlook for Manhattan is optimistic with steady employment growth driving healthy consumer spending and New York’s continued dominance in commerce, culture and tourism, according to Cushman & Wakefield.
Rodeo Drive, Los Angeles
2017 Rent: $875/SF
2016 Rent: $800/SF
The three-block Rodeo Drive offers luxury retailers and flagship locations and is well known because of its depiction in movies and television. Its prominent retailers include Tiffany & Co., Chanel, Gucci, Prada, Saint Laurent, Louis Vuitton, Goyard, Cartier, Ralph Lauren, Versace and Vera Wang.
“Rodeo Drive’s legendary glamour attracts celebrities and tourists alike,” Cushman & Wakefield Senior Director Carine Marmann said. “It’s a must-see destination for people visiting LA. Films and television continue to depict the grandeur that makes it the jewel of Beverly Hills and an important part of LA’s identity as a prominent fashion destination.”
Los Angeles has a growing food scene with an influx of restaurants and cafés that provide grab-and-go options or restaurants with quick sit-down service. Operators such as Beaming, Sweetgreen, Cava Grill and Joe & the Juice are expanding throughout the city. Newcomers like Everytable recently opened at the Bloc. Eataly and Javier’s opened in Westfield Century City mall in recent weeks.
Looking forward, retailers will focus on reducing their footprints, which will lead to more concentrated retail areas. More pop-up locations and lifestyle centers are expected, as well as a use of augmented reality to enhance the customer experience and remain competitive in Los Angeles.
Union Square, San Francisco
2017 Rent: $700/SF
2016 Rent: $685/SF
Union Square is a popular shopping destination for visitors looking for luxury retailers like Tiffany & Co. and Saks Fifth Avenue. Several retailers also have flagship locations in this shopping area, including Apple, Levi’s, Sephora, Nike and Brooks Brothers, all of which offer different experiences beyond just buying products.
“With the strong local economy and continued dominance as the tech capital of the world combined with the influx of tourists to San Francisco, investors continue to clamor for retail real estate assets in Union Square,” Cushman & Wakefield Vice Chairman Kazuko Morgan said. “Very few areas in San Francisco or the United States offer a comparable level of density and access to such a large complement of restaurants, shops, convention and entertainment centers, and fine hotels — all conveniently located within walking distance.”
North Michigan Avenue, Chicago
2017 Rent: $550/SF
2016 Rent: $550/SF
A steady boost in tourism has made Chicago among the most attractive markets for retail expansion. Over 50 million tourists visited Chicago in 2016. Chicago’s retail scene is growing across its submarkets, especially with fast-casual and full-service restaurants leasing space in the Loop and West Loop/Fulton Market neighborhoods. E-commerce retailers, such as Bonobos, Warby Parker, Untickit, Bucketfeet and Marine Layer, also are opening locations throughout the city. Emerging retail locations include Fulton Market District and Logan Square, according to the report.
“Retailers have continued to create unique flagship locations, investing millions in new stores and renovations,” Cushman & Wakefield Managing Director Danny Jacobson said. “The area is filled with one-of-a-kind retail experiences that attract more than 50,000 pedestrians each day.”
Lincoln Road, Miami
2017 Rent: $300/SF
2016 Rent: $325/SF
E-commerce is having a big impact on the Miami retail market, and Amazon plans to open an 850K SF distribution center by the end of 2018. Even though many retailers have been downsizing and closing stores in Miami, it remains a strong retail destination because of its popularity among tourists and foreigners with second homes who continue to shop even during during down periods. The city also is benefiting from job growth and a growing population.
Lincoln Road also is South Florida’s only open-air pedestrian mall, according to Cushman & Wakefield Senior Director Greg Masin.
“With its proximity to the ocean, diverse mix of flagship tenants and dining options, Lincoln Road continues to resonate with tourists and locals alike,” Masin said.
Many new mixed-use developments in the city offer live-work-play environments that have a retail component with a steady flow of shoppers. Emerging hot spots include Allapattah, which is attracting investors who have been priced out of Wynwood. American Dream Miami will create a 5M SF retail and entertainment complex at Interstate 75 and Miami Gardens Drive.
Worth Avenue in Palm Beach also made the top 10 retail locations with annual rents of $145/SF. Retailers in Palm Beach are using technology to enhance the shopping experience. They are also cutting down on space and signing shorter-term leases at lower rents. Palm Beach also benefits from loyal customers who will continue to support retailers in the future, according to the report.