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Posted on 4/14/09 Credit Apple for the democratization of style and functionality, blame the economic crisis for the luxury buyer's interest in lower priced items for their casual needs, or acknowledge the influence of celebrities who pair $5,000 "It Bags" with Ugg boots and Vince t-shirts, the bottom line is that luxury consumers increasingly seek a high/low mix in apparel and home goods; What they are not willing to compromise are excellent design and abundant choices.Twenty years ago Fifth Avenue was the exclusive domain of luxury goods - Bergdorf Goodman, Cartier, Ferragamo and the like. Today, the corner of 56th and 5th tells the story of why 5th Avenue has remained a thriving - and still glamorous - retail corridor while Madison Avenue has fallen behind. |
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"The evolution of luxury consumer trends is the roadmap to revitalization of underperforming retail districts, and current economic reality is facilitating this transition." |
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| On this very high profile corner Gucci and Harry Winston are now flanked by Abercrombie & Fitch and Armani's emporium. The latter two, both represented by PBSRE Principal Laura Pomerantz, are neighborhood newcomers that have tapped into the traditional luxury consumer's evolving interest in brands that have high aesthetic integrity without breathtaking price tags. The presence of aspirational luxury and lifestyle brands attracts foot traffic that trumps anything you see on Madison Avenue, where per square foot lease rates of recent years have closed out all but the highest margin retailers, making it much less of a draw to any but the wealthiest consumers. In economic terms, Madison Avenue has fallen victim to "clustering effects", where retailers selling the same or similar products locate together and narrow the appeal of a neighborhood causing long-term negative outcomes.
On Fifth Avenue, the introduction of aspirational luxury brands that appeal to the traditional luxury consumer as well as a broader demographic of business people, tourists and New Yorkers has created higher traffic that is a benefit to all. People who wouldn't have made a special trip to Gucci may stop in after all, and the Gucci customer who won't journey to Soho for a J. Crew cashmere sweater finds it easily accessible.
As leasing terms on Madison Avenue are becoming more favorable (even on coveted corner locations), the door is open to the creation of a retail district that is far more dynamic and profitable for both owners and tenants.
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