NEW YORK CITY—While core markets still top the list for luxury retailers, “many of these metros are saturated and that's pushing expansion in secondary cities,” says Michael Hirschfeld, SVP of JLL Retail. He was referring to the findings of JLL's The New World of Retail report, debuting today at the ICSC New York National Deal Making Conference. The report tracked the expansion of 350 retailers across the United States, assessing the vitality and attractiveness of retail markets.

The majority of luxury storefronts reside in five major cities—New York, Chicago, Las Vegas, Miami and San Francisco—and in fact saturate those markets with forty percent of the luxury retail locations in the country. “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 Hirschfeld.

It's not quite the same highest sales per square foot. New York, San Francisco and Miami return, but Los Angeles and Honolulu replace the other metros. The change, it seems, is one of demographics, with the LA metro area now the densest in the country, and international dollars, as Honolulu is home to one of the most famous beaches in the world.

And then there are those emerging markets. Dallas (ranked 6th overall) has seen the largest population growth since 2010, with specialty shopping areas “that rival the best retail nationally,” the report remarks. “These strong fundamentals are expected to continue as job gains from corporate expansions and relocations attract new residents to the region.” It sees similar trends in Houston and Phoenix, and a tourism boom similar to Las Vegas taking place in Orlando.

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. Moreover, while the affluent customer base accounts for only 20 percent of the population, “luxury customers spend twice as much as the average consumer,” reminds Greg Maloney, Americas CEO of JLL Retail.

Overall, the outlook for US luxury retail is rosy. While not a developing country with fast-track growth, its stability provides a safe haven for brands that can't be matched. With a strong population growth, variety and size in its markets and the influence of the millennial generation creating demand for innovation in retail concepts, luxury retailers will continue to see United States as the market of choice for luxury expansion.

JLL's The New World of Retail Index ranks the top US 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. The full report can be downloaded by clicking here.

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Geoffery Metz

Geoffery Metz is the content manager for ALM's GlobeSt.com, Credit Union Times and Treasury & Risk. Before joining ALM, he spent several years overseeing the newsroom at the financial wire service Business Wire, with special focus on multimedia presentation for the web.

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