December 9, 2014
Houston A Top Spot For Luxury Retail, JLL Reports
Houston landed a spot on JLL’s top 10 markets for luxury retailers in a report released at the International Council of Shopping Centers New York City conference today.
The Bayou City, along with Dallas and Orlando, were cited as an emerging retail markets, driven by ongoing population and income growth.
JLL’s The New World of Retail Index tracks the expansion of 350 retailers across 19 markets in the United States and assesses the vitality and attractiveness of retail markets. The ranking factors in variables such as household income growth, the number of total retailers, rental rates, vacancy levels, total leasable area, and the balance of supply and demand.
“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,” Michael Hirschfeld, senior vice president of JLL Retail said in an announcement. “The retail elite typically flock to core cities where they tailor service and product mix to shoppers, but many of these metros are saturated and that’s pushing expansion in secondary cities.”
Forty percent of U.S. luxury retailers concentrate their store locations in New York, Chicago, Las Vegas, Miami and San Francisco, according to the report, which also indicated that the core metro areas exhibit slower growth momentum compared to the secondary cities.
“Luxury customers spend twice as much as the average consumer, which is pushing the segment to prescriptively look at securing the right physical location,” Greg Maloney, Americas CEO of JLL Retail, said in an announcement. “High-street storefronts are typically where luxury retailers make their market foray; however, the availability for flagship space remains short. Increasingly, brands are seeking additional space in core markets and turning to malls and outlet centers, which offer a strategic merchandising mix that creates strong synergies to drive sales.”
The report provided a snapshot of the Houston retail landscape:
Houston’s current population of 6.4 million residents has experienced a 9% growth over the past five years thanks in large part to the energy markets growth within the city. As oil and gas companies expand their footprints within Houston, they are looking to hire top level employees. This white-collar expansion has given Houston an influx of households with incomes greater than $100,000. In turn, this increase in disposable income has spurred a growth within the mid to high-end/luxury retail market to the tune of nearly 1.6 million square feet – projected to arrive in 2014. Houston’s major retail markets like Uptown Park, City Centre, and the Woodlands have all benefited from a shift to a focus on “live, work, play, shop” within the Houston office and residential markets. In addition, those core areas are benefiting from the expansion of key luxury retailers looking to capitalize on Houston’s robust economy. Nowhere is this more evident than in the Galleria district of the city where retailers Cartier, Dior, Hermes and Tom Ford have all announced new stores openings at OliverMcMillan’s River Oaks District project, and Saks Fifth Avenue has announced a move into a 198,000-square-foot location, nearly doubling their Galleria footprint.
The report follows an announcement by OliverMcMillan of a number of upscale tenants in the River Oaks District development.
Among the highlights of the JLL report:
Luxury retailers continue to perform well, having experienced double-digit increases in sales revenue in the last few years.
The affluent customer segment, which represents U.S. consumers who earn more than $100,000 annually, accounts for 20 percent of the population but 40 percent of all consumer spending.
Luxury retailers in New York, San Francisco, Miami, Los Angeles and Honolulu recorded the highest sales per square foot in 2013.
Also on the luxury retail radar are Atlanta, Orlando, San Diego, Washington, D.C., and Seattle. The other Texas cities on the list are Austin (No. 17) and San Antonio (No. 18.)