Luxury retailers are showing no signs of retreat. Despite economic headwinds, brands like Gucci, Louis Vuitton, Chanel and Prada are locking in leases along some of the world’s most prestigious shopping corridors.
“The Scarcity of prime space continues to drive significant competition says Erika Schanke, EVP of global business development at JLL.
In the first half of 2025, newly opened retail square footage rose 65% from a year earlier, according to a recent report from JLL.
Long-term plays
Slower growth and tariffs contributed to revenue declines for some marquee luxury brands. Gucci’s sales fell 14% on a comparable basis in the third quarter, while LVMH, owner of Louis Vuitton and other luxury brands, slipped 4% for the first nine months of 2025.
Even so, demand for prime retail space remains. Rising construction costs and competition from multifamily and mixed-use projects have driven retail construction to historic lows. Availability in the United States fell to just 4.9 million square feet in the second quarter of 2025, more than 50% from the quarter before, JLL reports. According to Schanke, this dynamic is fundamentally changing the negotiations between luxury tenants and their landlords.
“The limited availability of prime properties and the competitive nature of retail create a risk where a brand could be displaced by a rival willing to pay premium rents or even acquire the property to secure it indefinitely.” Schanke says. “Given the current business environment and their strong financial positions, it continues to make strategic sense for major luxury brands to become owners of these prime locations.”
Changing Demographics
Millennials and Gen Z now account for 60% to 70% of new luxury customers. They were largely responsible for surging demand at brands like Coach, which saw 14% sales growth in fiscal Q3 2025, while Prada Group’s Miu Miu posted a 49% sales increase in the first half of 2025. That’s causing some luxury retailers to rethink their approach to where and how they sell.
Location strategy depends on the brand. Contemporary and streetwear brands choose neighborhoods like SoHo or the Meatpacking District to reach younger shoppers, while ultra-luxury retailers like Bottega Veneta are sticking with Upper Fifth Avenue and Madison Avenue.
The push to attract younger customers is also changing what’s inside stores. Coach recently integrated coffee concepts into its stores, following in the footsteps of Ralph Lauren and Tiffany. “It increases the dwell time and exposes them to a new customer,” Schanke says. “it also provides the brand with a significant marketing advantage, transforming shoppers into organic brand ambassadors generating widespread social media exposure at no cost.”
Luxury Loves New York, and Other Locales Too
Despite a drop in tourism, New York remains a global luxury hub, with 42 new openings in the year ended July 2025, up from 34 a year earlier. But other markets are gaining ground. South Coast Plaza in Costa Mesa, CA, added nine luxury stores, while Southdale Center in Edina, MN, landed four.
Brands are using data to identify new markets. By analyzing e-commerce and wholesale sales patterns, luxury retailers are discovering untapped high-income demographics in unexpected places. Markets once considered tertiary, like Nashville, Austin, and Houston, are now landing luxury stores.
“These brands are recognizing that their customer base isn’t confined to the major cities like New York and L.A.,” Schanke notes.
By locking in prime locations now, luxury retailers are signaling confidence that the sector’s allure will outlast today’s uncertainty.
Visit JLL at ICSC NEW YORK, booth 1635 on level 3.
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