Shopping in luxury branded stores used to be primarily for the urban crowd, especially the high-earning office workers who once crowded the streets of major downtown metros during the pre-COVID era. Today, however, these luxury brands are migrating into more outlying suburban areas, in response to the large numbers of Americans who have physically moved away from the city centers. This has been largely due to COVID-era trends that continue to this day, such as the rise of work-from-home employees that remain enmeshed in their suburban homes, in addition to the mass exodus of the population that has relocated to more bucolic suburban settings.
An example of luxury brands expanding into the suburbs include the upcoming openings of Gucci and Breitling by this fall at Market Street – The Woodlands, located in the Houston suburb of The Woodlands. These brands will join other luxury tenants in the retail center, including Tiffany & Co., Louis Vuitton and Chanel Fragrance & Beauty Boutique.
“As has always been the case, we are seeing that luxury brands follow the consumers,” said Steve Sumell, executive vice president, Portfolio for Trademark Property Company. “Wealth is no longer constrained to just high-density metro areas and is now found in the suburbs like The Woodlands, which is an influential and top suburb. With development-wide renovations at Market Street – The Woodlands, we have created a more experiential setting where people want to be, which has attracted more customers as well as several ultra-luxury and accessible luxury retailers.”
Other executives in the retail industry also see the potential of targeting untapped suburban areas for luxury tenant growth.
“We think the luxury segment in the U.S is underpenetrated,” said Chris Maguire, CEO of SRS Real Estate Partners. “The luxury tenants have been focused on the higher end markets — such as New York and Chicago — and haven’t been in the smaller markets. But today the demographics, the disposable income and the demand is now there in these smaller markets. We think that’s going to translate into more luxury, and aspirational luxury, in many of these smaller markets throughout the U.S.”
Additional luxury tenancy growth in suburban markets include The Westfield Topanga & The Village mall, a URW-owned mall in the Los Angeles suburb of Canoga Park, Calif., opening a new luxury fashion wing in 2023, which will include a 7,500-square foot Hermes boutique and a 21,000 square foot Arhaus. Within the last five months, in Roseville, Calif., a suburb of Sacramento, Calif., a 5,268-square foot unit Gucci store opened, and in the Scottsdale Fashion Square, in Scottsdale, Ariz., a 2,344-square foot Christian Louboutin had its debut.
Expect to continue to see yet more untapped smaller markets, especially those on a growth trajectory, to be eyed by luxury tenants in the future.
