Let’s Get Physical: European Luxury Store Openings Rose 77% in 2022, says Savills
LONDON — Luxury store openings in Europe increased by 77 percent in 2022 as international travelers returned to the U.K. and the Continent and splashed their money on high-end merchandise, said Savills in its latest Global Luxury report.
The international estate agent said Europe accounted for 23 percent of new luxury retail openings worldwide, second only to China and ahead of North America.
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Anthony Selwyn, co-head of prime global retail at Savills, said that a “relatively fast recovery in luxury spend in the region, helped in part by the return of international visitors, has no doubt helped move Europe back up the agenda for expanding luxury brands.”
He added that a recalibration of rents on a number of “key” luxury streets, combined with improved availability in some cases, had further bolstered leasing activity.
Globally, there was an 11 percent increase in new luxury store openings in 2022 compared with the previous year. China accounted for 41 percent of all new openings worldwide, despite ongoing lockdowns throughout the country.
The Middle East saw an increase of 125 percent compared with 2021, albeit from a relatively low base. Savills said that in the wake of the pandemic, luxury brands have been refocusing on “relatively underserved affluent markets,” with Dubai remaining a primary focus alongside emerging locations such as Doha, Qatar.
Marie Hickey, commercial research director at Savills, said research showed “that brands are now open to a wider variety of locations, a trend we expect to continue. While the major luxury destinations of Milan, London and New York will continue to hold the greatest appeal to many acquisitive luxury brands, availability challenges in these markets will temper activity over the next 12 to 18 months, meaning that new store activity in markets beyond this top tier will continue to expand.”
Savills added that London was one of the most “active” luxury markets in Europe last year, with the highest number of store openings. Bond Street, in particular, has been a hot destination for brands following Great Portland Estate‘s redevelopment project at the north end of the street, near Hanover Square.
The central segment of Bond Street is now the most in demand, with Gucci refurbishing a space at 144 to 146 New Bond Street, next door to Chloé, and near stores including Fendi and Alaïa. Moncler and Off-White are also moving to the neighborhood.
Savills said, such is the demand for space on central Bond Street, that rents are set to rise in the next 12 to 24 months, and they will soon be among the highest on the street, where rents are already dizzying.
Saint Laurent has reportedly broken a record for rent on the street, and in the U.K., paying more that 13 million pounds annually for a multistory property, according to The Sunday Times of London.
The new Saint Laurent store will sit on the corner of Grafton Street and New Bond Street, slightly south of where its sister brand Gucci will open. Saint Laurent has declined to comment on the rent, or the move.
As reported, megabrands have been migrating northward to New Bond as the big luxury groups, and property companies, snap up real estate on the northern, Oxford Street end, which in years past had been a hodgepodge of retail with few major fashion brands.
The Savills report said there are many opportunities at the very north end of the street where the rents are cheaper.
Savills said that “brands should be open to being pioneers in this segment of Bond Street to take full advantage. With the redevelopment of the Fenwick department store and Victoria’s Secret space in this northern quarter, a variety of new opportunities will be delivered in the coming years.”
The report also highlighted Milan, which it said was “exceeding all expectations. Demand for new space is growing, which has helped to drive prime headline rents above pre-COVID[-19] levels.”
It added that demand was not abating.
Winning formats in Milan, and Italy as a whole, are those that combine “concepts and experience,” such as Portrait Milano by Ferragamo in Corso Venezia, and the new Louis Vuitton space in the historic former Traversi garage in Via Bagutta, near Piazza San Babila.
The report went on to say that, worldwide, the “ultra-luxury brands” led the charge with regard to store openings and accounted for 68 percent of all new openings in 2022.
Fashion and accessory brands stepped up their activity last year, with a 21 percent increase in new store openings year-on-year, Savills said. By contrast, there was a decline in new openings by jewelry and watch brands.
The softening, Savills said, was driven by “reduced activity” by the jewelry brands. By contrast, the specialist watch brands continued to expand their stand-alone boutiques at the same level seen the preceding year.
In Europe and elsewhere, watch brands took advantage of the pandemic to focus on domestic customers and affluent, underserved, second-tier cities. “We saw store openings across a wider variety of markets, 16 in total, whereas in 2019 it was only across eight markets.”
The report said Dublin in particular saw a flurry of luxury watch brands, largely via a partnership with a local operator, establish stand-alone boutiques in the city. The openings were fueled by the country’s “expanding luxury watch spend.”
Looking ahead, Savills said it expects demand for retail space to grow, and for retailers and brands to plant their flags in new regions and neighborhoods.
The report referred to Bain’s forecast for the global personal luxury market to grow by 5 to 7 percent a year through to 2030, representing a total expansion of more than 50 percent to 580 billion euros.
“With brands continuing to drive sales growth through their owned store network, realizing this market potential will no doubt mean that more stores will open globally. Brands will also upsize existing stores in key markets,” said Savills. “This is likely to mean a continued focus on major global and destination cities, with smaller, highly affluent gateway cities, particularly those in Europe, moving up the agenda.”
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