U.S. retail and food services sales in July, at $696.4 billion, were up 3.2% over the same month a year ago, according to Census Bureau estimates. Luxury retail, in particular, has been ascending, the beneficary of persistent and post-COVID pent-up demand and robust retail expansion, according to a new Luxury Report 2023 released by Jones Lang Lasalle (JLL) this week.
The United States accounted for the largest share of the global luxury market, 34% of overall sales, and JLL foresees ongoing growth to $83.33 billion in 2028 compared to $69.51 billion in 2022. Last year alone, luxury retailers added more than 650,000 sf of new selling spaces and stores with enhanced ecommerce capabilities, and JLL anticipates further expansion in prime retail corridors, suburban malls, and shopping centers.
LVMH, the global giant whose brands include Louis Vuitton and Tiffany, increased its net store count last year by 108 to 5,664 units worldwide. Kering Group, which controls brands that include Gucci and Bottega Veneta, added 100 stores, bringing its total to 1,659.
The average new luxury lease size is now greater than 5,000 sf.
Luxury retail getting more comfortable in the Sunbelt
JLL suggests that the stars are aligned for bricks and mortar luxury retail. The retail sector as a whole continues to report solid fundamentals and low vacancy rates. Ecommerce, as a percentage of total retail sales, appears to have stalled at around 15%. And more than three-quarters of frequent luxury shoppers polled in a recent survey said they plan to visit a luxury store as often as or more frequently than they did last year.
JLL is finding that while New York and California account for over half of all new luxury store openings in the U.S., the Sunbelt is seeing significant expansion in places like Atlanta, Miami, and Las Vegas. Surprisingly as well has been the willingness of luxury brands to open new stores in malls, which accounted for 38% of the space added last year.
A growing number of mall operators now devote entire wings to luxury brands. In Toronto, for example, The Oxford Properties-owned Yorkdale Shopping Centre is repurposing 100,000 sf of space to increase the mall’s luxury composition to 20% in 2025, from 13% today.
What’s also indisputable has been the preference of luxury retailers toward street retail located in prime corridors, which account for more than 45% of all new luxury leasing activity in the U.S. Prime corridors include New York City’s Times Square, which saw a 29.1% increase in corridor foot traffic between July 2022 and 2023. Boston’s Newberry Street corridor saw an 18% year-over-year increase in foot traffic. The Beverly Hills Triangle accounted for 41% of all luxury store openings in Los Angeles last year, including Chanel’s largest flagship store in the U.S., a 30,000-sf lease.
Quoting CoStar data, JLL notes that cities where rents are rising fastest, like Las Vegas, have also been magnets for luxury dealers.
Secondhand products offer sales alternatives
Last year 12% of new luxury leases were for luxury boutiques, a growing category within this sector, says JLL. Brands in this category include Kith, Elyse Walker, and The Webster.
But there are some warning signs that could slow the luxury juggernaut. For one thing, there’s a lack of available retail space in an industry sector with historically low new deliveries. For another, so-called aspirational shoppers are still struggling with inflation at every retail level, not the least being luxury.
JLL reports that the market for secondhand luxury products grew by 28% in 2022. (Earlier this year, eBay launched “Certified by Brand,” which offers new, certified pre-owned, and limited-edition luxury products.) With more consumers concerned about environmental issues, brands that want to remain relevant must demonstrate a willingness to invest in the circular economy.
Related Stories
| Aug 11, 2010
Turner Building Cost Index dips nearly 4% in second quarter 2009
Turner Construction Company announced that the second quarter 2009 Turner Building Cost Index, which measures nonresidential building construction costs in the U.S., has decreased 3.35% from the first quarter 2009 and is 8.92% lower than its peak in the second quarter of 2008. The Turner Building Cost Index number for second quarter 2009 is 837.
| Aug 11, 2010
AGC unveils comprehensive plan to revive the construction industry
The Associated General Contractors of America unveiled a new plan today designed to revive the nation’s construction industry. The plan, “Build Now for the Future: A Blueprint for Economic Growth,” is designed to reverse predictions that construction activity will continue to shrink through 2010, crippling broader economic growth.
| Aug 11, 2010
PCL Construction, HITT Contracting among nation's largest commercial building contractors, according to BD+C's Giants 300 report
A ranking of the Top 50 Commercial Contractors based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
Webcor, Hunt Construction lead the way in mixed-use construction, according to BD+C's Giants 300 report
A ranking of the Top 30 Mixed-Use Contractors based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
Report: Fraud levels fall for construction industry, but companies still losing $6.4 million on average
The global construction, engineering and infrastructure industry saw a significant decline in fraud activity with companies losing an average of $6.4 million over the last three years, according to the latest edition of the Kroll Annual Global Fraud Report, released today at the Association of Corporate Counsel’s 2009 Annual Meeting in Boston. This new figure represents less than half of last year’s amount of $14.2 million.
| Aug 11, 2010
First CityCenter projects earn LEED Gold
CityCenter announced today that it has received three Leadership in Energy and Environmental Design LEED Gold certifications from the U.S. Green Building Council for: 1) ARIA Resort's hotel tower; 2) ARIA Resort's convention center and theater; 3) Vdara Hotel. ARIA and Vdara will open in December on the Las Vegas Strip and are the first of CityCenter's developments to be LEED certified.
| Aug 11, 2010
Whiting-Turner, EMJ Corp. top BD+C's ranking of the nation's 40 largest retail contractors
A ranking of the Top 40 Retail Contractors based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
Callison, MulvannyG2 among nation's largest retail design firms, according to BD+C's Giants 300 report
A ranking of the Top 75 Retail Design Firms based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants