Madison Avenue Finds a New Groove

Take a walk down Madison Avenue in New York and the familiar sounds of summer in the city will ring out: cars honking, gleefully chattering pedestrians, and more recently, the ever-present hiss of circular saws and thuds of new construction.

After a decade of falling rents and rampant vacancies, New York’s most prestigious stretch of real estate is buzzing once again. In the second quarter of 2024, retail availability crept down to 12.3 percent from a high of 40 percent in 2021, according to data from brokerage Cushman and Wakefield.

It’s been a long time coming. Rents in the famous retail district soared dangerously high in the early 2010s, just as e-commerce began to surge. This contradictory dynamic pushed tenants out in droves; by the time the pandemic struck, nearly half of the neighbourhood’s storefronts sat empty. Between 2015 and 2021, the average asking rent more than halved, from $1,600 per square foot to $700, data from CBRE shows.

At that point, retailers were already on the rebound, fuelled by stimulus checks and voracious consumer appetite for newness. Suddenly, the low rents on Madison Avenue became an opportunity for luxury brands to expand their presence in the area and lowered the barrier to entry for new tenants, which will soon include Khaite, Toteme and French jeweller Boucheron.

The revival of Madison Avenue mirrors an overall boom in brick-and-mortar retail, in which the years-long trend of supply outpacing demand has reversed. Competition for coveted real estate is more fierce than ever — including an eight-block area on Madison between 62nd Street and 70th Street that’s particularly hot right now, brokers said. Outsize demand has already pushed up the parameters of the 20-block retail area (57th Street to 79th Street) to 86th Street, where Todd Snyder opened a new store on Aug. 1, joining Alex Mill, Faherty, James Perse and Brooks Brothers on the block.

“[Madison Avenue] is back in full swing,” said Sonia Mosseri, creative director of Still Here, a downtown-favourite denim line that recently opened a location on the street. “Everyone who lives up there hasn’t left and they’re excited to see it bounce back.”

Still Here joins a growing number of younger premium brands looking to find new customers in the affluent Upper East Side zip code. Their demand has already driven up rent prices, from an average of $718 per square foot in the fourth quarter of 2021 to $884 in the second quarter of 2024, according to CBRE.

But for newcomers on the street, serving the area’s customers poses as much of a learning curve as it does an opportunity. The wealthy older clientele of the Upper East Side are used to a higher level of service than their downtown counterparts, brands say, but they are more likely to stay loyal to the brands they connect with the most.

A Game of Musical Chairs

In 2019, the closure of Barneys’ 275,000-square-foot flagship seemed to signal end times for the avenue. The loss of its anchor retailer meant waning foot traffic and overall excitement in the neighbourhood. It was also symbolic of larger shifts across the industry, where brick-and-mortar looked increasingly unattractive in the e-commerce era.

Today, the former Barneys space still sits vacant — landlord Ben Ashkenazy has said he is waiting for one big retailer to buy it. But the storefronts around it have rebounded en masse, driven by not only new retailers hoping to capture the area’s affluent residents but also existing tenants looking to upgrade their space and visibility on the street, brokers said.

“It’s a bit like musical chairs. But in musical chairs everything shrinks; this is a musical chairs of expansion,” said Corey Shuster, a broker at Douglas Elliman. “People are taking bigger stores and going after more prominence on the avenue.”

Hermès kicked off the streak, opening a new airy flagship on 63rd in 2022. Its old space on 62nd was snapped up by Dolce and Gabbana. Goyard, which has operated a boutique on 63rd since 2014, announced plans to move into a larger spot on the avenue in 2025. A bigger store is also in the works for Lafayette 148, whose outpost on 76th Street will now be occupied by L’Agence.

What’s in Store?

Simply being on Madison isn’t enough to drive sales; tenants must cater to the particular tastes and needs of the multigenerational Upper East Side shopper and find new ways to lure them in.

The most successful Madison Avenue retailers focus on service, said Matthew Bauer, president of Madison Avenue Business Improvement District. Top salespeople on the avenue will often go to lunch with top clients and call them personally to talk through new arrivals.

Conversion rates on Madison are higher and the cart size is bigger than that of its downtown store, said Still Here’s Mosseri. But serving this customer requires investment beyond rent. Still Here doubled its store staff on Madison Avenue since it opened and developed a 30-page guide on best practices.

“I always joke downtown that if I look at someone the wrong way or am too friendly, we’ve lost the sale,” said Mosseri. “Uptown, clients want two people catering to them, they want attention.”

Amenities and a special product range are also important components of service. Hermès’ flagship offers multiple lounge areas across its five floors, creating an inviting atmosphere for the brand to throw parties for its local customers. Todd Snyder’s new location boasts a more elevated product mix, a tailor shop and an assortment of vintage accessories in collaboration with Foundwell, aimed specifically at the neighbourhood’s resident, said chief product officer Alejandro Rhett.

Beyond Luxury

As Madison Avenue returns to growth, the scope of retail offering has also expanded. New tenants aren’t just traditional luxury labels; many are emerging contemporary brands or international labels having recently expanded to the US.

Being on the same street as Prada and The Row gives French contemporary line Officine Générale a nice glean, said founder Pierre Mahéo. But its prices are more affordable, which has helped drive sales, he added. In the midst of price hikes and challenging economic conditions, many luxury consumers are trading down.

As well, a wave of international brands, including Italy’s Del Core and France’s Destree are adding a sense of dynamism the avenue had been missing.

“Just pure, true, luxury, 200 year-old brands … doesn’t create enough of a merchandising mix,” said Steve Soutendijk executive managing director, Cushman and Wakefield.

Madison Avenue is also welcoming a number of new food and beverage concepts. British nightlife entrepreneur Robin Birley is set to unveil a members club between 69th and 70th Streets on Madison, while the newly-renovated Surrey Hotel will reopen with buzzy Miami restaurant Casa Tua in September. As of this week, residences at Giorgio Armani’s mixed-use complex at 760 Madison — fit with Armani shops and restaurants on the ground floor — have officially sold out.

“There’s fresh blood, new experiences,” said Shuster. “When you see excitement from both the small independent houses and the massive publicly traded ones, it’s a testament to the resurgence.”