C&W: New Breed of Retailers Creating ‘Cool Streets’
A new breed of urban, experiential and independent mid-market retailers catering to millennials is creating “Cool Streets” across the U.S., reported Cushman & Wakefield, New York.
“If retailers live and die by cool, the same also holds true of retail properties, shopping centers and entire neighborhoods,” said C&W Vice President of Retail Research Garrick Brown. “And in an age of frugality, e-commerce encroachment and vast gaps in shopping center performance, ‘cool’ matters now more than ever.”
Brown explored dozens of new, edgy retail districts across the U.S. and said an “explosion” of unconventional new retail concepts drives nearly all of them.
The C&W report said top Cool Streets include Sunset Park in Brooklyn; Logan Square in Chicago; Over-the-Rhine in Cincinnati; RiNo in Denver; Silver Lake in Los Angeles; Wynwood in Miami; North Loop in Minneapolis; Roosevelt Row in Phoenix; Carytown in Richmond, Va.; East Village in San Diego; Jackson Square in San Francisco; Delmar Loop in St. Louis; West Queen West in Toronto; Mount Pleasant/Main in Vancouver and Shaw in Washington, D.C.
In an age of increasing retail uncertainty, these neighborhoods serve as an “incubator” for what will likely be the next big retail concept, Brown said.
“Independent retailers remain the heart and soul of the Cool Street phenomenon,” Brown said. “Small chains, start-ups and little guys are those most thriving in those locations, and this is largely driven by rents, which stand at roughly 55 percent of the average asking rate of the nearest Class A mall or high street shopping district.”
Many of these up-and-coming districts are in transition, Brown said, and their rising popularity could bring a new wave of tenants that weakens the areas’ incubator roles. He predicted that more mainstream retailers–particularly beleaguered mall apparel shops facing Wall Street pressure–will begin searching for shop space in these areas.
“The mandate is and has been to reduce portfolios to only the Class A or trophy locations with the highest sales,” Brown said. “However, Class A landlords know this and many are aggressively raising rents. This situation may force many traditional mall tenants to rethink their real estate strategies and begin looking for creative alternatives. Cool Streets will be one of them.”
Millennial’s preferences for urban over suburban living and for experiences over material goods drive the Cool Streets trend, Brown said. In roughly half of the markets surveyed, restaurants outnumbered actual retail businesses two to one. “In areas like San Diego’s North Park and Cincinnati’s Over-the-Rhine, for example, craft brewing is the definitive driver behind the Cool Street’s resurgence, while fine dining has been central to the rejuvenation of New Orleans’ Warehouse District,” he said.
Cool Streets retailers often mix new and old, Brown noted, citing clicks-to-bricks players like Warby Parker eyewear and Bonobos men’s clothing. Similarly, brands like Kit and Ace apparel and Shinola wristwatches flourished by putting Cool Street locations at the forefront of their real estate strategies, he said.
