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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