Reports of retail’s pandemic-driven death have proven to be greatly exaggerated, particularly among luxury labels.
Luxury retailers are embracing brick-and-mortar stores, the Wall Street Journal reported. Their shoppers appear more inclined to go to physical locations to find what they want than to buy pricey goods online.
High-end brands in the last year have leased 650,000 square feet of new space in the United States, according to JLL. The total is up from 250,000 square feet in the previous year.
Luxury retailers’ deals averaged 5,000 square feet in the last year, according to JLL, up 28 percent from the previous year.
The brands are riding strong sales in recent years to expand in the United States, opening bigger locations in new markets and adding hospitality elements to some of their stores. Some brands are lending their names to residential assets.
“Luxury was one of the first categories to see sales return to pre-pandemic levels,” JLL retail research manager C. Ebere Anokute told the Journal. “Real estate was a big part of their strategy when it came to continued growth and expansion.”
Wealthy shoppers who can afford luxury goods are more immune than the average consumer to inflation and interest rates. Sales of luxury goods are expected to total $75.68 billion this year, according to Statista. That would represent a 9 percent increase year-over-year.
A notable example of the luxury expansion trend is unfolding at the Bal Harbour Shops north of Miami Beach. Whitman Family Development is working on a $500 million expansion to the shopping center. It’s not slated to open until late 2025, but the 40-store expansion is already fully leased.
Luxury retail real estate is also booming in some of New York’s most famous shopping corridors.
Hermes recently opened a 20,500-square-foot flagship store on Madison Avenue. French jeweler Van Cleef & Arpels is opening a location on the same avenue. And French luxury conglomerate LVMH is planning a property on the corner of Fifth Avenue and East 57th Street that can serve as a flagship store for Louis Vuitton as well as house brand offices.
— Holden Walter-Warner
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