The tech elite is heading south and fashion is right behind them.
Over the past 18 months, wealthy young professionals have flocked to Miami, Florida and Austin, Texas, often after realizing during the pandemic that they could earn their crypto millions without having to endure the freezing winters of New York or the San Francisco Bay Area. booming housing market.
Where young, wealthy millennials go, boutique hotels and fancy restaurants tend to follow. Luxury brands too.
In December, Chanel reportedly spent $40 million to design a two-story flagship in Miami’s Design District. Joyce Green, managing director of fashion at Chanel, told BoF that the store, her second in Miami, was “an opportunity to…connect with our customers in a key market with a unique local and international clientele and in expansion”. Louis Vuitton also opened its first American store dedicated to men’s fashion in Miami’s Design District. RealReal just opened a pop-up inside Saks Fifth Avenue and Gen Z favorite LoveShackFancy just opened a store in leafy Coconut Grove. Kith would open a second store in Miami.
In Austin, Gucci will open its first store in the city this spring, while Hermès will also open a boutique later this year. In November, Prada listed Austin as one of its next cities to target.
Both cities were hardly luxury deserts before the pandemic. Miami, in particular, has long been an international shopping destination, from Bal Harbor boutiques to trendy multi-brand retailers like The Webster. But brands are investing in both places with a focus rarely seen outside of New York or Los Angeles.
“Follow the money. This is where new leaders want to come and where big names go,” said Alexis Piquero, a sociology professor at the University of Miami. that I don’t have my eye on Miami or Austin, I’m late.”
While fashion is keen to drive away the wealthy shoppers heading to these markets, these sales won’t happen automatically. Tech entrepreneurs who wore T-shirts and jeans in San Francisco aren’t suddenly going to splurge on $945 Louis Vuitton drawstring shorts just because they moved to Texas.
ByGeorge, a luxury fashion retailer with two Austin locations, just had its best December in the company’s 40-year history. Brand president Molly Nutter attributed the company’s growth to new residents of the city. She said womenswear from Dries van Noten, Jil Sander and The Row was selling well, as was menswear from Boglioli, Loewe and Thom Browne.
“Right now everything is selling well,” Nutter said. “But we had to start thinking about size, because we’re seeing a wider range of sizes moving around here. Often Texas men are bigger guys and now we have smaller guys shopping with us than we had in the past.
Miami is a magnet for wealthy tourists from across Latin America, as well as New York snowbirds who winter in the city. Sparkling beaches and a vibrant art scene also attract visitors from around the world, who often take the time to shop in the Design District. Miami also regularly hosts big events that attract the fashion crowd, including Art Basel Miami and the recent Virgil Abloh tribute show.
In contrast, luxury brands have gone through several boom and bust cycles in Austin. The city has long been known for its universities, music scene, and the annual South by Southwest conference. Although several luxury brands, including Tiffany and Burberry, opened major stores in Austin more than a decade ago, the Texas capital never really became a true luxury destination. Neiman Marcus, founded more than a century ago in Dallas, only opened its first outpost in Austin, just three hours away by car, in 2007.
However, the demographics of both cities are changing rapidly.
Migration to Miami tripled from July 2020 to July 2021, according to real estate firm Redfin, while Austin is the fastest growing major metropolitan area in America, according to the US Census Bureau. Financial firms Blackstone, Apollo Global Management and Moore Capital Management have all recently opened offices in Miami. Tech giants Oracle and Tesla have moved their headquarters to Austin, and Apple, Meta and Google are also planning major office expansions there.
Young tech workers looking to these cities are looking for more living space and lower rent rates than New York or Los Angeles. It helps that Texas and Florida don’t have income tax either.
Austin has added several new high-rise buildings, and the city is building a $3 billion “second downtown” in North Austin, which will include retail space. The city has also just received a circuit for Formula 1, the popular motor sport enjoyed by the wealthy, which could attract wealthy, international crowds of shoppers from Europe and Asia.
Real estate prices in Miami and Austin are skyrocketing, prompting locals to complain about gentrification and inequality. Brands seeking prime real estate in Miami’s shopping districts are finding themselves in bidding wars, said Barrie Scardina, head of US retail at real estate firm Cushman & Wakefield.
So far, strong sales justify the rise in rents.
“The store’s success is unprecedented,” said Danny Harris, founder of Alo Yoga, which opened a store in Miami in December. “Miami is very sporty, diverse and international.”
At The RealReal, Austin men shop at Brunello Cucinelli (a label beloved by tech titans), in addition to streetwear brands like Off-White. In Miami, The RealReal has seen a growing demand for men’s Rolex earrings, rings and watches.
“Miami wanted more bling, with jewelry and watches sold [well] while Austin is more subtle,” said Courtney Hawkins, vice president of retail at The RealReal, which, in addition to her Saks Miami pop-up, opened a store in Austin in April. “High-value Birkin bags aren’t the best sellers in Austin, but those from Chanel, Fendi and Gucci are. It’s a market for $5,000 to $8,000 bags.
Far from New York
The trends that are attracting more professionals to Austin and Miami look set to continue. Remote work is likely here to stay, and the arrival of big companies like Tesla means more people will be putting down roots.
“[These cities] are at the start of their growth journey,” Scardina said.
Still, the population boom won’t necessarily lead to the rise of another Rodeo Drive.
“Tech people don’t understand European high fashion,” said Matt Mowell, senior economist at real estate firm CBRE. “Meanwhile, REI sales are going to be huge.”
Mowell pointed to Santana Row, a retail development in San Jose, Calif., that also initially had an influx of open fashion brands but has since lost tenants like Gucci and Urban Outfitters.
“I wouldn’t say that brands shouldn’t [open stores], but… cities have different cultures and part of that culture is how people spend their money,” he said.
ByGeorge’s Nutter said while shoppers aren’t trend-driven, the appetite for luxury fashion is palpable.
“It’s probably a stereotype to say tech doesn’t care about fashion because…brand and quality matter to them,” she said. “It’s not that everyone working in tech is suddenly going to be wearing over-the-top editorial looks, but they’re not all just wearing Patagonia and Allbirds.”
Some retailers are tweaking their product assortment to cater to entry-level luxury shoppers. The RealReal initially stocked its Austin store with expensive accessories from brands like Hermès, but eventually moved on to more menswear, streetwear collectibles and handbags from Chanel, Fendi and Balenciaga. .
Alex Taub, a tech founder who runs a startup that builds infrastructure for DAOs, moved to Miami from New York in July. He said he does a lot of window shopping in Miami’s Design District, but he just browses.
“I wouldn’t buy a lot of stuff, but maybe I would buy something,” he said of Miami’s luxury boutiques. “But I would also rather buy an NFT than a Bulgari watch.”