These statistics include all U.S. consumers,
and could simply be a trend impacting all
Americans. We do think that is the case,
however, as Millennials are likely at the
forefront of this trend. To prove this theory,
below we sliced the numbers up along
generational fault lines. Sure enough,
we saw some clear distinctions. With most
Millennials just entering their prime earning
years, these trends will probably continue
in the near future.
Cool Street Incubators
The retailers active on Cool Streets are a
mix of the new and the old (often with a
twist). Clicks-to-bricks players such as
Warby Parker, Bonobos, Marine Layer and
others have been active, as have the
occasional upscale mall or lifestyle center
retailer. Meanwhile, brands like Kit and Ace
and Shinola have flourished by putting
Cool Street locations at the forefront of
their real estate strategies.
Independent retailers remain the heart and
soul of the Cool Street phenomenon. Small
chains, start-ups and little guys are those
most thriving in those locations. Rents play
a big role in this. Across the 100 markets
included in this year’s report, average rents
in Cool Street neighborhoods stood at
roughly 55% the average asking rate of the
nearest Class A mall or High Street
shopping district. One of the challenges of
these neighborhoods is that most of them
are in transition; where they stand in the
Cool Street cycle dictates everything. Their
rising popularity may bring a new wave of
tenants, but it could be at the cost of their
role as incubators.
Looking ahead, many more mainstream
retailers will likely look for Cool Street shop
space in the months and years to come.
This holds particularly true for beleaguered
mall apparel concepts. Many of these chains
are under immense pressure from Wall
Street to close underperforming locations
as they “right-size” for e-commerce; the
mandate is to reduce portfolios to only the
Class A or trophy locations with the highest
sales. However, Class A landlords know this
and many are aggressively raising rents.
This situation may force many traditional
mall tenants to rethink their real estate
strategies and begin looking for creative
alternatives. Cool Streets will be one
of them.
...where they stand in the
Cool Street cycle dictates
everything. Their rising
popularity may bring a
new wave of tenants, but
it could be at the cost of
their role as incubators.
Retail Sales at Food Service and Drinking Places
As a Percent of Total Retail Sales
1995 – 2005 (Generation X)
9.5%
2006 – Current (Millennials)
10.8%
2010 – Current (Millennials, Post-recession)
11.1%
11
Cool Streets Report