T
he resurgence of urban retail is gaining momentum across major US cities, driven by a surge in physical office occupancy, strong consumer demand, and the return of foreign tourists. Luxury brands are leading this revival by expanding their brick-and-mortar presence in top cities, with prime locations in revitalized city centers becoming highly sought after.
According to JLL's Luxury Retail Report, luxury conglomerates are increasingly acquiring prime urban properties to limit market entry for new competitors and solidify their brand presence. This trend is evident in cities like Los Angeles, where office occupancy has reached 61% and neighborhoods like Rodeo Drive and Melrose Avenue have become hotspots for luxury brands.
As foot traffic increases, rents are stabilizing or even growing in prime retail sub-markets, making urban retail properties attractive investments. Cities like Miami, Boston, and Chicago are seeing a full recovery of foot traffic compared to 2019, driven by the popularity of corridors like Miami's Design District and Boston's Newbury Street.
Investors are taking notice, with savvy investors looking to secure prime locations in areas like Brickell and the Miami Design District. "The Miami market continues to see strong demand throughout the urban core," said Zach Winkler, Senior Managing Director with JLL. "Ongoing development across multiple sectors has fueled robust tenant demand."
In New York City, retailer demand and sales productivity remain strong, with historically low vacancy rates leading to rent stabilization and growth in prime retail sub-markets. In Chicago, a clear uptick in demand for urban retail is driving interest in high-traffic areas where return-to-office trends are boosting daytime foot traffic.
As the sector continues to recover, urban retail properties are poised to capitalize on the continued growth of city centers. With luxury brands leading the charge and investors pouncing on prime spots, this resurgence signals promising long-term growth in the evolving real estate market.
