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Forty percent of luxury retailers concentrate their store locations in New York, Chicago, Las Vegas, Miami and San Francisco
Coco Chanel once said, "In order to be irreplaceable one must always be different," and in retail the right storefront can do just that: create irreplaceable differentiation. In the United States, five major cities, New York, Chicago, Las Vegas, Miami and San Francisco, have risen to the top of the list for luxury storefronts, according to JLL's The New World of Retail report. JLL's report, debuting at ICSC's New York Conference today, tracks the expansion of 350 retailers across the United States and assesses the vitality and attractiveness of retail markets, examining why the classic real estate principle of location, location, location remains essential to the success of brands.
The report indicates that while core metro areas ranked at the top of the list of preferred locations, they exhibit slower growth momentum compared to secondary cities. Several emerging retail markets like Dallas, Houston and Orlando possess the attributes for longer term success driven by ongoing population and income growth. "Luxury goods embody elegance and acute attention to detail, and the storefronts and locations that encapsulate these treasures must be as unique as the goods themselves," said Michael Hirschfeld, Senior Vice President of JLL Retail. "The retail elite typically flock to core cities where they tailor service and product mix to shoppers, but many of these metros are saturated and that's pushing expansion in secondary cities."
According to JLL's report, luxury retailers continue to perform extremely well, having experienced double-digit increases in sales revenue in the last few years as their clientele was minimally affected by the economic upheaval. The affluent customer segment, which represents the top 20 percent of U.S. consumers who earn more than $100,000 annually, only accounts for one-fifth of the population, but 40 percent of all consumer spending. Last year, luxury retailers located in New York, San Francisco, Miami, Los Angeles and Honolulu recorded the highest sales per square foot.
"Luxury customers spend twice as much as the average consumer, which is pushing the segment to prescriptively look at securing the right physical location," added Greg Maloney, Americas CEO of JLL Retail. "High-street storefronts are typically where luxury retailers make their market foray; however, the availability for flagship space remains short. Increasingly, brands are seeking additional space in core markets and turning to malls and outlet centers, which offer a strategic merchandising mix that creates strong synergies to drive sales."
While the United States isn't a developing country with fast-track growth, its stability provides a safe haven for brands that can't be matched. The United States continues to be the market of choice for luxury expansion because of the strong population growth, the variety and size of its markets and the influence of the Millennial generation creating demand for innovation in retail concepts. Luxury retailers will continue to eye opportunities in the historically strong and most well-known markets, like Manhattan, but also follow the robust population growth and housing market.
JLL's The New World of Retail Index ranks the top U.S. retail markets based on a combination of short-term variables and sustainable long-term characteristics including household income growth, the number of total retailers, rental rates, vacancy levels, gross leasable area, and the balance of supply and demand. To learn more about each city ranking download the full report: http://bit.ly/NewWorldRetail JLL's Retail Group serves as the industry's leader in retail real estate services. The firm's more than 800 dedicated retail experts in the Americas partner with investors and occupiers around the globe to support and shape investment and site selection strategies. Its retail specialists provide independent and expert advice to clients, backed by industry-leading research that delivers maximum value throughout the entire lifecycle of an asset or lease. The firm has more than 90 retail brokerage experts spanning more than 25 major markets, representing more than 440 retail clients. As the largest third party retail property manager in the United States, JLL's retail portfolio has 350 centers, totaling 67 million square feet under management in regional malls, lifestyle centers, grocery-anchored centers, power centers, central business districts, transportation facilities and mixed-use projects. For further information, visit www.jllretail.com
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4.0 billion and gross revenue of $4.5 billion, JLL has more than 200 corporate offices, operates in 75 countries and has a global workforce of approximately 53,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.0 billion square feet, or 280.0 million square meters, and completed $99.0 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $53.0 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.
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