0:00

This. Is bigger pockets daily. I'm your

0:02

host Tyler Man Happy Friday to yeah

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This is the show where I read

0:06

articles from some of the sharpest Mayans

0:08

in real estate investing. If you want

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to hear interviews with some of the

0:12

authors of these articles, Check. Out

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the Bigger Pockets Real Estate podcast. Okay,

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almost time for the show. Will get right

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Because. with

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Luxury brands are buying up

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properties. Will. High end

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landlords fade away. By.

3:28

Mariah Costa. Why?

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Rent would you can buy. Luxury.

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Retailers are booming and using their

3:35

extra cash to buy up highly

3:37

coveted retail spaces across the Us.

3:39

in Europe, Prada.

3:41

By the building where it's Fifth

3:44

Avenue Stores located for four hundred

3:46

twenty five million dollars. While Lvmh

3:48

is said to be in talks

3:50

to purchase the building where Bergdorf

3:53

Goodman a store is located. Meanwhile.

3:56

Gucci and. Ballon.

3:58

John Allow and every parent. But he. Carrying.

4:01

Bought. Of property on Fifth Avenue for

4:04

nine hundred sixty three million bucks. Expanding

4:06

it's real estate portfolio it's already

4:08

includes a landmark properties in Party

4:10

in Tokyo. This. Recent

4:13

flurry of activity has helped Fifth Avenue

4:15

maintain it's spot as the world's most

4:17

expensive retail street to rent. With.

4:19

Rents had two thousand bucks. Per.

4:22

Square foot. And twenty twenty

4:24

three. According to real estate firm Cushman

4:26

and Wakefield, a square foot. Here's

4:29

a sign. I can put a

4:31

sign. For. Two thousand

4:33

bucks. States. It.

4:36

Also marks a potential change and a

4:38

luxury retail real estate market to. Let's.

4:41

Talk about that changing rental

4:43

landscape. While. Retailers buying their

4:45

brick and mortar shops isn't really that new.

4:47

It's a trend that's really picked up. At

4:50

a time when commercial real estate

4:52

space is struggling to maintain it's

4:54

tendency. So. And United

4:56

States. This trend has largely concentrated in

4:58

New York, although retailers have also bought

5:00

spaces and other high and areas. Chanel.

5:03

For example, paid sixty three million dollars

5:06

for a building in San Francisco. While.

5:08

Lvmh plans to turn the Beverly

5:10

Hills property it bought for two

5:12

hundred forty five million bucks into

5:14

a flagship Louise with Home Store.

5:17

Commercial. Real estate has been under stress from

5:19

weak growth in a high interest rate environment, but

5:21

one of the biggest areas for growth has been.

5:24

Retail. Believe it or not, That's.

5:27

Because even as the hybrid workplace

5:29

is here to stay, us retail

5:31

sales in areas like Manhattan are

5:33

resurging. Even. If they

5:35

are below pandemic levels, kids to

5:37

Koster Director of Market Data and

5:39

Policy at our he be and

5:41

why. Said. This and a

5:43

statement. With. Slow but

5:45

steady growth and tourism activity

5:47

to meet her foot traffic

5:49

in office visitations retailers are

5:51

absorbing a footprints and landlord

5:54

concessions are becoming less common.

5:57

And. Quotes. Global.

5:59

Interest in luxury the goods has helped

6:01

high end retailers like Lvmh clinch record

6:03

profits, even as sales growth has started

6:05

to stall a little bit. Luxury.

6:08

Retailers have some extra money to spend and

6:10

are wondering why they should spend it on

6:12

rent. Eric Men Kiss

6:14

code share of leasing for law

6:17

firm Adler and. Stuck. In

6:19

celled told The Wall Street Journal. He

6:21

also said this the rents that the

6:24

luxury retailers are were paying on Safe

6:26

and Another prime locations were simply. Astronomical.

6:31

Two. Thousand per square foot. There.

6:33

Comes a point in time when these retailers

6:35

looked in the mirror and said. Why?

6:38

Am I making my landlord so rich?

6:42

And quotes. As a great

6:44

point. So here's what this means for a

6:46

C R E Investors. Oh,

6:49

buying real estate. Might. Seem like

6:51

an obvious use of extra cash for

6:53

luxury retailers. They likely aren't just thinking

6:55

about the money they're saving on rent.

6:58

Owning a property means they have more say

7:00

in what they can do with the space

7:02

while controlling who else can rent it. For.

7:04

Down Fifth Avenue in New York or

7:07

as the street I can't pronounce in

7:09

Party and you'll see nearly all the

7:11

main luxury fashion brands. Luxury.

7:13

Retailers in the consumers that shop there

7:16

tend to congregate in the same places.

7:19

They. Also, are really looking for the same

7:21

returns that a real estate investor might

7:23

be looking for and are instead seeking

7:25

a long term branding and marketing strategies.

7:28

The. Headwinds at the C R E sector

7:30

has been facing also. Have.

7:33

Meant less appeal for new investors to

7:35

enter the space. For. Landlords

7:37

who are facing a credit crunch and higher

7:39

interest rates. Giving up their stake in a

7:41

luxury property might make financial sense. so in

7:43

other words, Luxury. Retailers that

7:45

went to buy their properties don't say

7:48

so much competition. For.

7:50

C R E Investors The sectors Changing.

7:53

Or the Federal Reserve is still projected

7:56

to lower rates this year. Maybe it

7:58

could be awhile before the that translates

8:00

into better deals. For. Now

8:02

at least retail real estate, luxury

8:05

or not is the current winner.

8:07

Of. The down friend in commercial

8:09

real estate. A

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and that will do it for today show. Is.

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And I'll see a back here tomorrow.