Despite potential slowdowns in consumer spending and limited space, major luxury retailers remain drawn to the allure of New York City's vibrant market.
A report from Cushman & Wakefield finds that these brands are attracted to three Manhattan areas in particular — Madison Avenue, SoHo, and Fifth Avenue.
Particularly, SoHo is the largest urban district in the country, which lures in a "diverse mix of domestic and international shoppers," according to Cushman. The CRE firm noted that Jacquemus has become a favorite for shoppers since opening in October 2024. Also, the submarket is expected to see Calvin Klein reopen a collection store in a new location this year.
Cushman said that Fifth Avenue stands out for its "highest concentration of top-performing retail stores in the U.S.," which attracts global luxury retailers. Some major developments in the submarket include Tiffany & Co. revamping its almost 110,000-square-foot flagship store in 2023, and Rolex is undergoing work at its 665 Fifth Avenue property, where it plans to convert the asset into a new 30-story tower that would feature a flagship that measures 43,000 square feet. Cushman said that the space would represent the "largest in the world."
As for Madison Avenue, the luxury destination offers brands "guaranteed prominence," according to Cushman. A major recent development includes Giorgio Armani opening a multi-use property that features 11 stories of luxury condos, boutique shops, and a restaurant. Another includes Burberry renovating its 33,000-square-foot flagship store. Also, more is coming in 2025; brands including Jessica McCormack, Goyard, and Dolce & Gabbana are scheduled to open stores on Madison Avenue.
Also, between 2023 and 2024, Cushman estimates there have been at least 14 real estate acquisitions by major luxury brands. This includes Prada, Rolex, LVMH, and Kering.
"These acquisitions reflect a strategic shift toward long-term stability in a competitive leasing environment," Cushman said.
That comes despite space being limited, elevated interest rates, higher construction costs, and soaring rents. Specifically, available space has been cut in half on Fifth Avenue and Madison Avenue to sit between 13 and 15 percent. But at least for now, that's not pushing away luxury investment in NYC.
"Brands are proactively adapting by securing long-term leases, pursuing strategic acquisitions, and undertaking significant renovations to ensure prime positioning on the most sought-after streets," Cushman explained.
While it added that luxury spending is projected to soften in 2025, those brands "have lasting power," with their assets being "some of the most valuable in commercial real estate."