JLL: There’s revolution in North America’s prime urban corridors

“The push and pull between office and retail uses in urban markets is changing how people utilize spaces,” according to the report, titled City Retail: Understanding North America’s prime urban corridors. “Retail and office are also becoming increasingly intertwined as office workers demand better retail amenities in their buildings and retailers want to locate nearby to take advantage of the available daytime population these companies provide.

The report zeros in on several prominent retail corridors in such cities as Boston, Chicago, New York City, Seattle, Toronto and Vancouver. These remain popular with retailers eager to test new concepts because of their exposure to residents and tourists alike.

There are challenges, though. While demand grows for prime real estate in these areas, supply is limited because owners are eager to hold onto their valuable properties as a hedge against a recession, the report says. “The scarcity of product on the market leads to further compressing cap rates, typically below 5 percent in existing corridors, and increasing price tags.”

Another problem is that while retailers are seeking smaller spaces, owners are sometimes reluctant to carve up large vacant spaces like those formerly occupied by department stores.

Restaurants are also playing an important role in the transformation of such important corridors as Miami’s Design District, Washington, D.C.’s 14th Street and in New York City’s Meatpacking District. But skyrocketing rents are making it hard for some restaurants to make a go of it in prime locations.