Miami and Austin Are the New Luxury Destinations in America 

The Tech Elite Is Moving to the Southern States of the United States, and Fashion Is Following 

With remote work, many wealthy professionals are moving to Miami and Austin, and luxury brands are following them. But selling to America's new tech billionaires isn't so simple

In the past 18 months, high-income young professionals have moved to Miami, Florida, and Austin, Texas, often after realizing during the pandemic that they could earn millions in cryptocurrency without enduring New York's freezing winters or facing San Francisco Bay's prohibitive rent. The two hottest cities in America in terms of economic growth are the new havens for tech billionaires, who are seeking a more relaxed lifestyle and significantly lower taxes. 

Major Luxury Groups Bet on Miami and Austin: The New Paradises of High Fashion

Where young and rich Millennials go, so do trendy boutiques, hotels, and restaurants, as well as luxury brands. Chanel has just invested $40 million to design a two-story flagship store in the Design District, the luxury shopping neighborhood in Miami. According to a report in Bof from the general manager of the maison, Joyce Green, the new store in Miami (the second in the city) represents - an opportunity to... connect with our clients in a key American market, with a unique and rapidly growing local and international clientele. - Also, Louis Vuitton has opened its first men's clothing store in the United States in Miami's Design District. Last December, The RealReal (the retailer that made luxury second-hand mainstream), opened its pop-up store inside Saks Fifth Avenue in the Brickell neighborhood, while the luxury brand favored by Gen-Z, LoveShackFancy, opened its boutique in the lush neighborhood of Coconut Grove. Meanwhile, Kith is about to open its second store in Miami. In Austin, Gucci will open its first boutique this spring, while Hermès will open one by the end of the year. In November, Prada announced that Austin is among the next destinations for expanding its retail business in the USA. 
 
For these two American cities, luxury is certainly not a new concept that arrived only after the pandemic. Miami, in particular, has long been a destination for international shopping: from the stores of Bal Harbour to trendy multibrands like The Webster. But high-fashion labels are now investing in both cities, like never before seen in America outside of New York or Los Angeles. - This is where new chefs want to come, and where high-profile people are moving - said Alexis Piquero, a sociology professor at the University of Miami. - If I'm an entrepreneur and not keeping an eye on Miami or Austin, I'm behind the curve. 
 
While major luxury players rush to chase the new high-end consumers moving to these markets, a rapid rise in sales will likely take some time. Tech entrepreneurs who wore T-shirts and jeans in San Francisco won't suddenly indulge in luxury $945 Louis Vuitton drawstring shorts just because they've moved to Texas. However, business for luxury companies with stores in Austin is doing very well. 

ByGeorge, a luxury fashion retailer with two locations in Austin, has just had the best December in the company's 40-year history. The company's president, Molly Nutter, attributed the business growth to the city's new residents, revealing that Dries van Noten's womenswear, Jil Sander, and The Row sold well, as did menswear from the Milanese brand Boglioli, and also Loewe and Thom Browne. - Right now, everything is selling well in Austin. But we had to start thinking about expanding the size range. Usually, men in Texas have a larger build, but now we have many customers of smaller sizes compared to the past - said Nutter.
 
Miami is a magnet for wealthy tourists from all over Latin America, as well as for New York's 'snowbirds' who spend winters in the warmth. Sunny beaches and a vibrant art scene also attract international visitors, who often find time for luxury shopping in the Design District. Miami also regularly hosts major events that draw the fashion crowd, including Art Basel Miami and the recent tribute show to Virgil Abloh. 
  
In Austin, on the other hand, luxury brands have always gone through cycles of ups and downs. The city has long been known for its universities, music scene, and the famous annual concert festival of South by Southwest. Although several brands, including Tiffany and Burberry, have opened large stores in Austin for over a decade, the Texas capital has never become a true luxury destination. The renowned Texas fashion house Neiman Marcus, founded over a century ago in Dallas, didn't open its first store in Austin (just three hours away) until 2007.

The Demographic Composition of Miami and Austin Is Rapidly Changing 

The migration wave in Miami tripled from July 2020 to July 2021, according to real estate company Redfin; while Austin is the fastest-growing metropolitan area in America, according to the US Census Bureau. Financial companies Blackstone, Apollo Global Management, and Moore Capital Management have recently opened new offices in Miami. Tech giants Oracle and Tesla have moved their headquarters to Austin, and Apple, Meta, and Google are also planning significant expansions with new office openings. 

America's Hottest Cities Are the New Havens for Tech Billionaires Seeking a More Relaxed Lifestyle and Significantly Lower Taxes 

Several new skyscrapers have sprung up in Austin, and a second downtown is under construction in North Austin where new commercial spaces will be developed. A $3 billion investment operation. The city has just regained the Formula 1 appointment, the popular car race loved by the wealthy, capable of attracting a fan base from both the United States and the rest of the world (Europe and Asia in particular). Real estate prices in Miami and Austin are rising, causing discontent among locals, worried about the gentrification phenomenon that's increasing social inequalities. Big brands looking for prime real estate in Miami's luxury shopping neighborhoods are caught in a bidding war, according to Barrie Scardina, head of retail for the Americas at real estate firm Cushman & Wakefield. 

 

Currently, Strong Luxury Retail Sales Justify the High Rents in America's Fastest-Growing Cities 

The store's success is unprecedented, - said Danny Harris, founder of Alo Yoga, which opened a store in Miami last December. - Miami is a city of athletes, international with its unique and original mix of genres. -  At The RealReal in Austin, the top men's high fashion brand is Brunello Cucinelli (the most appreciated made-in-Italy label by high-tech blue collars), along with luxury streetwear brands like Off-White. Meanwhile, at The RealReal in Miami, there's a growing demand for earrings, rings, and Rolex watches for men. - In Miami, flashy jewelry and watches like Rolexes, which are always a profitable investment, are hot sellers, while fashion in Austin is more understated, - said Courtney Hawkins, VP retail at The RealReal, which, after the success of the pop-up Saks X The RealReal at Saks in Miami in December, debuted a new boutique in Austin last April. - The high-value Birkin bags aren't the best sellers in Austin, but Chanel, Fendi, and Gucci bags are. It's a market for bags between $5,000 and $8,000.

Is the Migration from New York a Temporary Phenomenon?

The phenomenon of internal migration of high-income professionals to Austin and Miami seems poised to continue. What initially represented a temporary pandemic escape could become a permanent residence. The arrival of large US companies like Tesla will bring many more people to put down roots here. Indeed, a new automotive plant will be built in Austin by Tesla, the first in the United States outside of California.

These cities are considered by experts to be just at the beginning of their growth journey. However, the demographic boom won't necessarily lead to the rise of another Rodeo Drive. - American tech geniuses still don't quite understand European high fashion, - said Matt Mowell, senior economist at real estate firm CBRE. - Meanwhile, mall sales at REI are skyrocketing. - Mowell pointed to Santana Row, an outdoor shopping center in development in San Jose, California, where he initially advocated for the opening of high-fashion stores, but since then, the real estate company has lost tenants like Gucci and Urban Outfitters. - I wouldn't say brands shouldn't [open stores], but... cities have different cultures, and part of that culture is how people spend their money. - he concluded. Nutter of ByGeorge stated that even if new high-end consumers aren't well-versed in trends, the appetite for luxury fashion is palpable. - It's probably a stereotype to say tech enthusiasts aren't interested in fashion because... brand and quality matter to them. - she then concluded by saying - Not everyone who works in US tech companies will suddenly wear trendy cover outfits, but not everyone only wears Patagonia and Allbirds". 
 
Some luxury retailers are adjusting their product assortment to meet the new needs of new luxury clients who don't want excesses. The RealReal initially stocked its Austin store with expensive accessories from brands like Hermès, but eventually had to shift towards streetwear collections for men's clothing, while the female audience prefers Chanel, Fendi, and Balenciaga bags. Alex Taub, a tech entrepreneur, co-founder of Upstream, a startup that helps launch and manage DAOs for business automation, moved from New York to Miami last July. He stated that he shops in Miami's Design District but also goes just to look around. - There are many things I wouldn't buy, but some I definitely would, - referring to luxury boutiques in Miami. - But it's also true that I'd rather buy an NFT than a Bulgari watch. 

Consultation for Selling Luxury Products in the American Market