Luxury retail hot spots are changing. The strips of high-end retail that used to span a single street, like Rodeo Drive in Los Angeles and Michigan Avenue in Chicago, are expanding beyond linear streets with a mix of luxury and fast-fashion retail brands, entertainment centers and restaurants.
Real estate values in these locations, dubbed "prime urban retail corridors" in JLL's City Retail report, are expected to spike in coming years, as competition grows increasingly fierce and demand for space in these markets grows, according to JLL director of retail research James Cook. Examples of existing corridors include Union Square in San Francisco, Fifth Avenue in New York and Newbury Street in Boston. Emerging corridors include Abbot Kinney in Los Angeles and New York's Meatpacking District. Asking rents in these hot spots can get expensive, ranging from $50/SF to $2,710/SF.
"In retail, store location is everything — pick the wrong corner and your brilliant concept can fail," JLL president of retail brokerage and capital markets Naveen Jaggi said in a statement. "We know that sometimes retailers want that prime main-and-main location, but just don't have the budget. So, we looked at core U.S. cities to find more affordable areas for retailer expansion."
Below are 10 of most affordable prime urban retail corridors, according to JLL research.
10. Fillmore, San Francisco
Average Asking Price: $115/SF
Annual Rent Growth: 13.6%
Roughly eight years after its last major redevelopment, this San Francisco corridor is home to an assortment of traffic-driving luxury retailers.
9. Metro Center, Washington, D.C.
Average Asking Price: $100/SF
Annual Rent Growth: Flat
This center rests between the White House and Chinatown, and receives an influx of traffic from discount shoppers and customers in search of household brands.
8. Design District, Miami
Average Asking Price: $95/SF
Annual Rent Growth: 2.2%
Known for its assortment of high-end retail and gathering places for tourists, Miami's Design District is undergoing Phase 2 of its development, adding about 60 tenants to the market.
7. Hayes Valley, San Francisco
Average Asking Price: $90/SF
Annual Rent Growth: 4.7%
San Francisco's housing crisis is putting added pressure on this retail corridor, resulting in a pullback in investment and development, though entertainment venues are plentiful.
6. University Avenue, Silicon Valley
Average Asking Price: $90/SF
Annual Rent Growth: 7.9%
Independent, non-chain boutiques are driving traffic at University Avenue as the growing presence of tech companies in Silicon Valley shifts consumer preferences in the area.
5. The Marina, San Francisco
Average Asking Price: $85/SF
Annual Rent Growth: 7.7%
This neighborhood-friendly location in San Francisco is best-known for its assortment of athleisure boutiques, though its has been expanding its retail and restaurant offerings as of late.
4. Fulton Market, Chicago
Average Asking Price: $75/SF
Annual Rent Growth: 8.9%
This area, in a repurposed industrial and meat distribution hub, has established a reputation for its burgeoning combination of eateries and apparel.
3. Pike Street, Seattle
Average Asking Price: $65/SF
Annual Rent Growth: 18.2%
Averaging about 18% in annual rent growth, this prime retail corridor is seeing a boost from its assortment of fashion and apparel retailers, in addition to its robust restaurant selections.
2. Wicker Park, Chicago
Average Asking Price: $55/SF
Annual Rent Growth: 4.5%
Known for its assortment of food and beverage restaurants and its unique aura, Wicker Park has caught the eye of foreign investors recently.
1. Market East, Philadelphia
Average Asking Price: $50/SF
Annual Rent Growth: 25%
This retail hot spot is experiencing rapid annual rent growth as a growing millennial presence spurs new development and boosts restaurant offerings.
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