Where is the recovery of urban commerce?
This question is at the center of attention this year International Council of Shopping Centers retail event in Las Vegas. JLL gave his side of the answer by releasing a new report on the recovery of urban retail at the event, charting the way forward for commercial real estate. The brokerage also hosted a panel focused on the topic. Moderated by james cookdirector of retail research at JLL for the Americas, speakers included Naveen JaggiPresident of Retail Advisory Services at JLL, Greg MaloneyPresident and CEO of Commercial Real Estate Management at JLL and Ryan SeverinoChief Economist of JLL.
For urban retail to resume, JLL believes the industry needs a full return of office workers and tourists to US cities.
“Until we see Asia and Europe come back to the United States, we’re not going to see this urban recovery like we saw in 2010 and 2018,” Jaggi said during the panel.
More workers are heading into the office, but not at pre-pandemic rates. New York City Office Rebound Still Lags Average According to Urban Retail Report castle systemis the average of the 10 cities, but has seen the biggest increase since the start of 2022. In January, office occupancy was 18.1%, but it has now risen to almost 40%. In response, rental activity is picking up, with new agreements signed in Midtown, including Hello Yoga and Din Tai Fung.
“Most people don’t want to work alone at their kitchen table for the next 30 years,” Severino said. “We just need to ride out some of these idiosyncratic disruptions like new virus variants or higher energy prices.”
As for tourism, the American markets which depend heavily on it have struggled. According to JLL’s analysis of Placer.ai data, domestic tourist foot traffic is up 14% in New York City compared to 2019, and while San Francisco is still below 2019 levels, foot traffic to Union Square has doubled in the past year.
“Luxury and fast fashion are the two categories you’ll see tourism buying more than the other,” Jaggi noted. He thinks luxury brands will focus on the US market in the coming years as it is more predictable than the Asian market.
“If I look at sectors and pay attention to their growth over the next few years. I look at luxury because for me it’s my big bet for the near future,” he said.
The report also revealed that the return to casual sit-down dining is happening in all major urban markets, with new restaurants opening as demand increases. According to Morning consultation, Americans’ comfort with dining out was 75% as of April 30, up 14 points from the start of the year. Eating out hit a new high, with 82% of people feeling comfortable.
Emily Fu can be reached at [email protected].