Luxury retail brands are increasingly investing in their physical store locations across major markets such as New York and Los Angeles, recognizing the significance of in-store experiences for engaging consumers.
These investments over the past three years have included expanding store footprints, remodeling flagship stores with stunning interiors and in-store restaurants, and deepening real estate investments to solidify presence on the most sought-after luxury retail streets.
Despite facing challenges such as a constricted supply of prime retail space, rising rents, higher interest rates, and escalating construction costs, luxury brands remain committed to their brick-and-mortar operations.
In the ensuing sections, we highlight key trends in the luxury retail markets of New York City and Los Angeles, showcasing how brands are responding to the opportunities and challenges in these iconic cities.
New York City continues to be a priority for luxury brands, especially in key Manhattan corridors where record demand is evident.
The availability of retail space on Fifth and Madison Avenues has halved in the last five years to just 13-15%, while SoHo’s Spring and Prince Streets sit at a mere 10%.
Fifth Avenue stands as the premier address for global luxury brands in Manhattan’s Plaza District, boasting the highest concentration of top-performing retail stores in the U.S.
In 2023, Tiffany & Co. unveiled its massive two-year renovation of its flagship at Fifth Avenue and East 57th Street, creating a nearly 110,000 square foot, ten-story retail and experiential destination.
Stopping for Tea at Tiffany’s has become an unparalleled experience that every consumer feels they must try.
Additionally, Louis Vuitton is amidst a major redevelopment of its 20-story flagship at 737 Fifth Avenue.
Rolex is also transforming its property at 665 Fifth Avenue into a new 30-story tower, featuring a 43,000-square-foot flagship, the largest in the world.
Further enhancing the allure of Fifth Avenue, Chanel opened its first U.S. watch and jewelry flagship at 730 Fifth Avenue in February 2024.
Moncler has also announced plans to open its largest global store at 767 Fifth Avenue.
Madison Avenue remains another key destination, primarily for premier jewelry and haute couture fashion houses.
This avenue is highly sought after by brands looking for elite, upscale locations that ensure prominence.
In October 2024, Giorgio Armani will debut a new multi-use development featuring Giorgio Armani and Armani/Casa boutiques, alongside a restaurant and 11 floors of luxury condominiums under the Giorgio Armani Residences brand.
Burberry is also set to reopen its 33,000-square-foot flagship at East 57th Street and Fifth Avenue after a 16-month renovation in October 2024.
Moreover, French luxury goods brand Goyard plans to open its first Madison Avenue store at 699 Madison Avenue in 2025.
Italian fashion house Dolce & Gabbana is slated to debut its 23,000-square-foot flagship at 695 Madison Avenue this year.
British jewelry brand Jessica McCormack will further enrich the area by opening its first store outside the UK at 743 Madison Avenue in Spring 2025.
SoHo epitomizes a unique blend of high-end designers and contemporary brands, establishing itself as the largest urban retail district in the U.S.
The district draws a diverse mix of domestic and international shoppers.
Recent expansions in SoHo include Jacquemus opening its first U.S. store on Spring Street in October 2024, quickly becoming a consumer favorite.
Dior opened its first standalone fragrance and beauty boutique at the corner of Prince and Greene Streets in the same month, joining the trend of brands engaging consumers with beauty and fragrance stores.
Additionally, Balenciaga launched a nearly 10,000-square-foot store on Greene Street in September 2024, showcasing its “Raw Architecture” concept.
Calvin Klein is also poised to reopen its collection store in a new SoHo location in 2025.
In response to the scarcity of available space combined with increasing rents, luxury brands are taking control of their real estate investments.
In 2023 and 2024, at least 14 major real estate purchases by retailers—including LVMH, Kering, Prada, and Rolex—have been recorded in New York City, primarily along Fifth Avenue, Madison Avenue, and SoHo.
These acquisitions reflect a strategic shift towards long-term stability in a highly competitive leasing environment.
Turning to Los Angeles, Rodeo Drive maintains its status as the heart of the city’s luxury retail market, where demand continues to outpace supply, leading to skyrocketing rental rates.
With just one store available for lease, Rodeo Drive remains one of the most constrained luxury retail markets worldwide.
In May 2023, Chanel opened its largest U.S. flagship covering 30,000 square feet, dedicating the top two floors to luxury client experiences.
Rolex and Patek Philippe also debuted their largest U.S. boutiques in 2024 at 312 & 314 North Rodeo Drive, occupying nearly 14,000 square feet.
In August 2024, Givenchy relocated its West Coast flagship to an iconic Frank Lloyd Wright-designed building at 332 North Rodeo Drive, occupying approximately 8,000 square feet.
Major redevelopments by Dior and Cartier further heighten competition for prime retail spaces in this exclusive environment.
Though opportunities for asset acquisition have grown scarce in Los Angeles, those retailers that do own properties—such as LVMH’s redevelopment of its 317-323 Rodeo Drive asset for Dior—have the ability to invest in ambitious renovations.
Additionally, real estate investors are stepping up efforts to expand available retail space.
In July 2024, Wilshire Rodeo Plaza was acquired by private investors who plan to develop larger retail footprints to accommodate evolving luxury brand needs.
Looking ahead, luxury retail brands are poised to continue heavily investing in physical store locations in New York and Los Angeles, keeping these iconic cities at the forefront of the global luxury retail landscape.
Despite challenges such as rising rents, limited space, and increasing construction costs, brands are actively adapting through securing long-term leases, pursuing strategic acquisitions, and undertaking significant renovations to maintain prime positioning on these sought-after streets.
While consumer spending on luxury may slow in the coming year, these brands showcase enduring power, with their real estate remaining among the most valuable in commercial real estate.
As the demand for exclusive spaces rises, real estate ownership will remain a critical strategy for brands aiming for sustainable growth and success.
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