Real estate frenzy

In recent years, in-person shopping has seen a significant revival. Despite high interest rates and inflation, retail sales remain strong. However, retailers now struggle to find space for new stores. US vacancy rates are at a 10-year low, and rents are rising globally, except in Asia. Fashion brands today compete for prime locations with medspas, clinics, restaurants, and entertainment venues, meanwhile new retail construction has plummeted since the pandemic due to high interest rates and soaring construction costs. This supply-demand mismatch has shifted negotiation power to landlords and in response; some luxury groups are purchasing prime properties to secure top locations. For instance, LVMH, the owner of Louis Vuitton, spent about EUR 2 billion acquiring properties in Paris in 2023.

Source: Cushman & Wakefield, August 2024.