Although the pandemic had a profound negative impact on prime retail districts in urban downtowns, a strong recovery has been underway over the past several years, a new study by real estate specialist CBRE concludes. Specifically, average monthly foot traffic last year in 10 prime retail districts tracked by CBRE had recovered to 81% of pre-pandemic 2019 levels.
Looking ahead, CBRE predicts traffic will fully recover by the third quarter of this year of this year and could potentially surpass previous levels by the end of 2025.
“Although foot traffic has not yet been fully restored, many retailers are reporting sales surpassing pre-pandemic levels,” the report notes. “This trend suggests alignment with the Pareto Principle, which if applied to retail suggests that 80% of sales come from 20% of consumers. High-end retailers are catering to their best customers by expanding loyalty programs and establishing private clubs.”
Retailers that want prime space within high-street districts appear willing to wait for the right location. For example, Chicago retailers that are unable to find space within the Oak Street/Gold Coast district will often reject any space not located on the main thoroughfare.
While retailers that want to establish a “high-street presence” are often unwilling to settle for inferior locations, some retailers believe they can achieve synergies by establishing locations in multiple street districts within the same market.
For example, some retailers in Los Angeles have successful stores on both Rodeo Drive and Melrose Avenue, while those in New York can have locations along Madison/Fifth Avenue and in SoHo or Williamsburg. The additional stores can provide more convenience for local consumers, especially for digital purchase pickups and returns.
“Alternative street-retail districts can also offer retailers opportunities for brand expansion,” the report notes. “Food and beverage operators and certain apparel and personal care brands, for example, can perform better in alternative or neighborhood street retail districts, where rents are lower and build-out regulations are often less restrictive. They are also attractive for emerging brands that are leaving department stores and occupying their own street-retail storefronts.”
Click here for the full CBRE report.