Flagship stores on Fifth Avenue still trump Rodeo Drive for retailers

Los Angeles /
Nov.November 04, 2016 02:00 PM

Retailers, particularly those in the luxury category, still prefer New York to Los Angeles as the location for their flagship stores by two to one, according to a new report by JLL.

“Flagship stores are definitely more important now than they ever were 15 years ago,” said James Cook, who heads the Jones Lang LaSalle’s retail research division that released the report. “As retailers footprint across entire U.S. have shrunk, flagships are bigger and better and more dazzling than ever before. In order to conquer the U.S., retailers need a splashy over the top flagship in a major high traffic U.S. market, and clearly New York is number one.”

The report collected and analyzed the features of flagship stores across four U.S. markets–New York, Chicago, San Francisco and Los Angeles–across all retail price points. Because brands at the high end of the price spectrum are more likely to have flagship stores, 40 percent of the stores surveyed fell within the “luxury” or “luxury lite” categories.

Approximately 50 percent of those had opted to have their flagships in New York City, preferring Fifth Avenue to Rodeo Drive, the report shows. That’s despite Fifth Avenue’s landlords demanding more than four times the rents of their Beverly Hills counterparts. The average asking rent for a Fifth Avenue retail space was approximately $3,500 per square foot in the third quarter as compared to $800 on Rodeo Drive, according to Cushman & Wakefield.

Both apparel manufacturers and department stores overwhelmingly preferred New York. Luxury department store Neiman Marcus, for example, recently signed a lease for a flagship store to anchor the shopping complex at Hudson Yards, despite being headquartered in Dallas, Texas.

Luxury brands that have recently opened stores on Rodeo Drive include Bally, a high-end footwear boutique, which inked a lease for two floors at 340 Rodeo Drive. Chanel bought its long-term Rodeo Drive storefront for $152 million earlier this year in a deal that set a price per square foot record for California of $13,217.

Meanwhile, retailers seeking flagship space on Fifth could have an easier time finding potential locations than in previous years, as landlords are sitting on a record amount of vacant retail space, according to another report.

Nearly 16 percent of Fifth Avenue retail was vacant in the third quarter, compared to just 10 the previous year, according to data from Cushman.


Related Articles

arrow_forward_ios
Taiwanese investor buys Arcadia complex for $39M
Taiwanese investor buys Arcadia complex for $39M
Taiwanese investor buys Arcadia complex for $39M
Rexford buys into gap left by Mitsuwa’s move to South Bay mall
Rexford buys into gap left by Mitsuwa’s move to South Bay mall
Rexford buys into gap left by Mitsuwa’s move to South Bay mall
The Ratkovich Company Founder Wayne Ratkovich with renderings of West Harbor (West Harbor, Ratkovich)
Seven tenants announced for San Pedro’s West Harbor project, including Yamashiro
Seven tenants announced for San Pedro’s West Harbor project, including Yamashiro
(Facebook via Baldwin Hills Crenshaw)
Harridge buys Baldwin Hills Crenshaw Plaza; eyes $1B overhaul
Harridge buys Baldwin Hills Crenshaw Plaza; eyes $1B overhaul
LA city council to mull requiring vaccine proof at indoor venues
LA mulls vaccine mandate for indoor spaces
LA mulls vaccine mandate for indoor spaces
Mark and Arman Gabay and the Bedford Triangle property (LoopNet, Style Outlets)
Gabays asking $52M for trio of Beverly Hills retail properties
Gabays asking $52M for trio of Beverly Hills retail properties
Richemont Group CEO Jérôme Lambert and 411 N Rodeo Dr (Getty, Google Maps)
Richemont will take over Guess store on Rodeo Drive
Richemont will take over Guess store on Rodeo Drive
Disney Store at Montebello Town Center (Disney, Shops at Montebello)
Mall vs. The Mouse: UBS sues Disney store for $275K in back rent
Mall vs. The Mouse: UBS sues Disney store for $275K in back rent
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...