Luxury Retailers Snapping Up Store Space
Leading high-end firms are locked in for NYC and European streets.
Times are good for luxury retail brands as many major retailers double down on physical stores as they continue to gain more clarity on the value of physical retail space, according to JLL.
Physical stores provide more options to offer a high-end client experience and protect the pricing of their products, according to the report.
“The largest luxury retail groups are currently ditching leases and buying prime high street units across major cities globally,” JLL said.
Kering – owner of Gucci, Bottega Veneta, Balenciaga, and Saint Laurent – recently purchased a five-floor property on Milan’s Via Monte Napoleone for $1.4 billion. Not long before that, it spent $1 billion to acquire a property on Fifth Avenue in New York City.
Prior to this, Kering and other luxury retailers such as LVMH and Chanel made several purchases in Paris on Rue Saint Honoré, Avenue Montagne, Avenue des Champs Élysées, and other prominent locations.
In fact, luxury brands in Europe have paid more than $9 billion to buy landmark stores in the world’s top shopping locations since the beginning of 2023, according to analytics firm Bernstein Research.
Big profits from the deals are translating into strong corporate balance sheets for them, JLL said.
One of retail’s 25 biggest global players LVMH, has nearly doubled its market capital since 2019 with annual sales for the 2023 fiscal year hitting around $92.7 billion.
They continue to bank on consumers’ spending resilience, which is forecast to increase for a fourth consecutive year in 2024. Growing international tourism has been another driving factor.
“While new store openings from high-profile luxury retailers decline, location requirements and demand for larger store spaces have increased in priority,” Josefine Ulrich, Director of Retail Leasing Strategy & Operations, EMEA, said in prepared remarks.