Retail Renaissance: Tourists Fuel A Shopping Spree, Injecting $156 Billion Into Urban Markets

Tourists like to shop, and as people return to traveling, it's benefitting urban retailers.

Logan Airport in Boston has seen international passenger levels up to 27% higher than pre-COVID levels, and New York is expected to welcome 63.2 million visitors this year — just shy of its 2019 mark of 66.6 million, according to a recent report from real estate firm JLL.

Visitors to the U.S. have spent $156 billion as of September, a 31.6% increase over the same period last year and a 183.7% increase over 2021, according to the JLL report.

Consumer spending and international and domestic tourism are driving demand for prime urban retail, with foot traffic recovering to prepandemic levels in half of the prime corridors JLL surveyed for its City Retail 2024 report.  

A prime urban corridor is a shopping district that has a mix of high street, national and international tenants. They are typically named for the most notable street in the district, such as Chicago's Michigan Avenue, Vancouver's Robson Street or New York City's Fifth Avenue.

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Apparel retailers dominated leasing in prime corridors this year, with athleisure tenants expanding to account for nearly half of all prime corridor leasing activity. Luxury apparel and jewelry brands and boutiques continued to be major players in prime urban retail, accounting for 12% of new leases in the past year.

Luxury brands like Burberry leased two new stores on Fifth Avenue in New York, and Bottega Veneta and Cartier selected Chicago's Gold Coast for their new stores.

But it's not just the shopping. Since the pandemic, consumers are favoring experiences over goods. For example, performing arts spending grew more than 37.2% over the last year, and urban retail benefitted from musical performances from artists like Taylor Swift and Beyonce, whose nationwide tours spurred domestic tourism and encouraged hospitality demand in the cities they visited.

Morgan Stanley estimates that consumers spent $5.4 billion to see the two acts, averaging $1,650 on tickets, flights, hotels and food.

While retailers are seeing an uptick in sales, the locations they're choosing to lease in have shifted away from areas with a high concentration of office workers and closer to residential neighborhoods. In Chicago, for example, luxury retailers have left Michigan Avenue for the Gold Coast, and in New York, they moved from Madison Avenue to SoHo.

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