Since the beginning of the pandemic, retailers across the U.S. have weathered store closures, local lockdowns, an exodus of office workers, and a near-total decline in international tourism.
Now, with more than a third of Americans fully vaccinated and many economies reopened for business, there are finally signs of life — but retail’s recovery is set to be an uneven one, with some parts of the country roaring back to life while others stumble behind.
As the past year accelerated population trends already in play before Covid-19, real estate experts point to Sun Belt cities and suburbs as prime targets for retailers seeking to follow shoppers to where they are now living and working.
“The markets that have seen the highest amount of in-migration have been Dallas, Houston, Phoenix, Tampa, Atlanta, Miami, Austin — so just a who’s who of Sun Belt cities,” says Ken McCarthy, principal economist at the commercial real estate firm Cushman & Wakefield. By contrast, the cities with the most out-migration throughout the past decade have been New York, Chicago, Los Angeles, Detroit, St. Louis, Cleveland, Memphis.
A study by LinkedIn looking at users’ zip code changes between April 2020 and October 2020 found similar trends, with Austin, Phoenix, Nashville, and Tampa gaining the most workers.
“The movement has been from the northern tier into the southern tier, and if you are a retailer of any stripe, this is a very important movement to you. You know now from where the demand is likely to be rising the most,” says McCarthy.
Here are four markets that fashion and footwear retailers should be looking at now:
Southern Florida is benefiting from an influx of new residents from the Northeast, Canada, and California seeking sunshine, jobs, and no state income tax. And while in years past, they may have gravitated toward southwestern beachy locales like Naples or Fort Myers, the latest crop of newcomers is flocking to cities like Miami, says Drew Schaul, senior vice president of advisory and transaction services at commercial real estate firm CBRE’s South Florida office.
“We’re seeing people coming more to the southeastern side of the state because they like the cultural diversity, they like the energy that exists in Palm Beach, Broward and Dade County,” he says.
According to data from CBRE EA, retail sales in Miami have grown at an annual rate of 4.2% over the past five years, and are forecast to grow at an annual rate of 3% over the next five years.
Foot Locker opened a location in Miami’s Wynwood neighborhood in February, while Melissa Shoes and bespoke menswear retailer Hive & Colony have announced forthcoming shops in Aventura Mall. They join the Spanish footwear brand Castañer, which opened a franchised boutique in the mall this February, citing its popularity with local Latin American shoppers.
While smaller in scale than Houston or Dallas, Austin is a boomtown right now. This year alone, several Silicon Valley companies have announced plans to relocate their corporate headquarters to the Texas city, Tesla CEO Elon Musk moved in with plans to complete a massive manufacturing site nearby, and average home prices have hit an all-time high.
For retailers, though, the city’s cultural capital may be just as important as its incoming wealth.
The RealReal last month opened a boutique in North Austin, its tenth brick-and-mortar outpost, and Gucci announced plans for its first full-scale store nearby.
“Department store of the future” Neighborhood Goods opened in the city just as Covid-19 shut down its biggest tourism draw, the cultural festival South By Southwest. Its co-founder recently told Bloomberg that he expects foot traffic to fully recover to pre-pandemic levels by the summer.
Palm Beach, Fla.
Up the coast from Miami, Palm Beach is another South Florida destination that seems poised for recovery.
According to a report from Colliers International, the lease rate in Palm Beach County increased 4.4 percent in the first quarter of 2021, the highest in South Florida.
“At the end of the day, the purchasing power here is quite strong, and it’s an image-conscious, fashion-conscious consumer with a huge disposable income,” says CBRE’s Schaul.
At the open-air shopping and entertainment center Rosemary Square, new tenants include beachy lifestyle brand Faherty, swimwear maker Solid & Striped, and the Spanish footwear and accessories brand Mint & Rose. They join bigger names such as Urban Outfitters and Lululemon. In December, Jimmy Choo opened up shop at The Royal Poinciana Plaza in Palm Beach, a shopping center that also recently welcomed fashion brands Badgley Mischka and Lingua Franca.
Named one of the top commercial real estate markets for 2021 by the National Association of Realtors, Nashville is a cultural hub on the cusp of a major rebound. The city saw 5.5% retail rent growth in the first quarter from last year, according to data from commercial real estate firm JLL.
“It’s one of the highest growth markets that we’ve seen in terms of retail rents,” says Taylor Coyne, JLL’s senior manager of retail research.
“You’ve seen so much investment in Nashville and so much renewed interest, such a great food scene, such a great nightlife scene,” she added. “So I think that market was always going to continue to perform well, but the pandemic has just helped that along.”
In March, the boot and apparel company Ariat opened a store in the new Fifth + Broadway shopping and entertainment complex. The brand, which is renowned for its equestrian styles, plans to host live music performances in the space when it is safe to do so.