June 08, 2022
“Progress is slow, but retailer interest in urban corridors is returning and transaction volumes are increasing as shoppers, workers, travelers and diners return to city life,” according to a new report of the real estate services company JLL. Are they right?
The report finds more workers heading to the office, although well below pre-pandemic rates. Since March, the average occupancy rate of security company Castle systems average of 10 cities hovered around 43% of its pre-pandemic occupancy level, down from 17.5% at the start of the year. Recent analysis of The the wall street journal Cities with longer commutes have been hit the hardest economically, while urban areas where people live closer to work have a higher return-to-office rate.
Tourism has picked up with Times Square and Union Square in San Francisco seeing the biggest gains in foot traffic from a year ago. According to JLL analysis of Placer.ai data, domestic tourist foot traffic increased 14% in New York City compared to 2019. San Francisco is still below 2019 levels, but foot traffic to Union Square has doubled over the past year and interest in retail leasing is beginning to return.
Foot traffic to Chicago’s major urban corridors is less than 10% of 2019 levels. Miami hotel accommodation rates are well above 2019 levels despite restrictions on international travel. The United States still demands COVID-19 test before departure for international passengers.
Meanwhile, restaurants are poised for a “full recovery” to support city visits as concerns about dining out ease, according to JLL. According to a morning consultation investigation, Americans’ comfort with dining out was 75% at the end of May, up 14 points from the start of the year. Eating out has hit a new high since the pandemic, with 82% of people feeling comfortable with this option.
On his first trimester conference callMacy’s CEO Jeff Gennette said international tourist traffic, particularly from Central and South America as well as Europe, has helped its flagships Herald Square and Union Square, as well as many other sites around the world. downtown. He said: “While our downtown locations continue to lag in performance compared to 2019, we have seen a year-over-year improvement in their sales trend, these locations outperforming the rest of the stores.”
DISCUSSION QUESTIONS: How confident are you that urban retail will soon return to near pre-pandemic levels? Will the return of office workers, tourists or some other factor be more important in driving the recovery in most cities?
“Urban retail rejuvenation is underway, benefiting the retail, hospitality and tourism sectors. Back to the office, holiday season and good weather are driving urban traffic.”
“I think we’re in a precarious position. As inflation continues to rise with gas prices, the amount of disposable income is increasingly compressed.”