Dive Brief:
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In a sign of a major comeback for downtown retail, office workers and tourists have steadily returned to major U.S. cities through the first half of the year, though most are lagging their pre-pandemic normal, according to an urban retail recovery report from commercial real estate company JLL.
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New York's Times Square, where foot traffic is up 186.2% year over year, and San Francisco’s Union Square (up 101.4%) have enjoyed the biggest rebounds. In Chicago, foot traffic is up 73.5% at Fulton Market and 54.9% on Michigan Avenue. In Los Angeles, Melrose and the Third Street Promenade each have gains topping 50%.
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The recovery has been fueled by dining and has been weather dependent, with gains mounting as temps climb. That's helped Miami, which has been surpassing its pre-pandemic traffic. The Design District is “the only urban retail corridor to consistently outperform 2019 levels,” with footfall well above 2019 since last year, JLL found.
Dive Insight:
In 2021, some tourists took advantage of lifted lockdowns and still-affordable travel and some employees trickled back to the office. But whether urban retail would ever recover has remained unclear. Some analysts believe the optimal place to open a store has become the neighborhood, as so many people continue to work from home.
But others have believed — or, at least, hoped — that classic downtown activity would resume as the pandemic subsided. Foremost among the believers has been Nordstrom, which opened its New York City flagship, blocks from Times Square, just ahead of the pandemic. The store has depended on the neighborhood for continued loyalty through the past two years, but probably needs tourists and office workers to return in greater force.
It appears they have.
"With customer traffic and activity returning in city centers, Nordstrom urban store sales collectively rebounded and reached pre-pandemic levels," CEO Erik Nordstrom told analysts last week. "In fact, the Nordstrom Manhattan flagship store had the highest year-over-year sales growth among our stores this quarter."
Nordstrom's fleet also backs up other research from JLL, as full-line stores in the South continued to outperform those in the North during the company's first quarter, though "the spread tightened to 3 percentage points," he also said.
Glossier is among the retailers taking advantage of Miami's retail-friendly climate, with a store there that opened in March. But the DTC beauty brand is also returning to the Big Apple, with plans to re-establish a flagship in SoHo next year.
The downtown return is even better news for restaurants, with JLL finding potential for a full recovery as large majorities of Americans feel comfortable dining out again, especially outdoors.
"The urban retail recovery is still in the middle of its journey, but rather than the ebbs and flows of the past two years, it feels that U.S. urban markets are on a steady upward trajectory toward normalcy," JLL report author Taylor Coyne wrote.
