New York’s Upper Fifth Avenue is the most expensive retail street in the world with rents rising to US$3500/sqft. in 2015.
That’s nearly 50 per cent expensive than Causeway Bay in Hong Kong, which has held its second place on Cushman & Wakefield’s latest global rankings, despite the decline this calendar year of 14 per cent.
Cushman & Wakefield’s Main Streets Across the World report tracks over 500 of the top retail streets around the globe, ranking them by their prime rental value using Cushman & Wakefield’s proprietary data. The 27th edition of the report shows that rents have risen in 35 per cent of streets around the world – despite the increased global uncertainty experienced over the past 12 months. The report also includes a ranking of the 65 most expensive streets – the top one per country.
New York’s Fifth Avenue retained its position as the most expensive global retail location with rents up an average 3.6 per cent year on year and 46 per cent above the second-placed Causeway Bay in Hong Kong ($2399/sqft).
The top 10 Global high street retail destinations by rent (in US$/sqft/year):
1 Fifth Avenue (New York) – $3500.
2 Causeway Bay (Hong Kong) – $2399.
3 Avenue des Champs Élysées (Paris) – $1372.
4 New Bond Street (London) – $1321.
5 Via Montenapoleone (Milan) – $1035.
6 Bahnhofstrasse (Zurich) – $895.
7 The Ginza (Tokyo) – $882.
8 Myeongdong (Seoul) – $882
9 Kohlmarket (Vienna) – $478.
10 Kaufinger / Neuhauser (Munich) – $459.
In Asia Pacific, there has been a downward pressure on rents on the back of weaker retail sales and slowing tourism in China, particularly. This has resulted in lower rents, which is creating incentives for more international luxury brands and high street retailers to move in. However, interest rate hikes by the Chinese government could impact consumer spending power. Elsewhere, high-profile international retailers are targeting both Australia and New Zealand and Metro Manila.
Theodore Knipfing, head of retail, Asia Pacific at Cushman & Wakefield, said the outlook for Asia’s overall retail market is largely positive, with retail sales growth averaging 8.5 per cent over the next five years (in US dollar terms).
“Rising tourist numbers are spurring robust and sustained retailer demand – albeit firmly focused on prime, well-located space. Although the growth of eCommerce is notable across the region, physical stores will remain important, although landlords will need to focus on improving the shopping environment and customer experience in order to compete for retailer demand.”
Europe
Avenue Champs Élysées in Paris retained its crown as the most expensive retail location in EMEA, followed closely by London’s New Bond Street. Strongest rental growth this year was recorded in Dublin’s Grafton Street and Covent Garden in London, as well as in top high streets in Milan and Rome. However, high streets in Russia and Ukraine experienced sharp declines linked to the conflict between the two countries that yielded slowdowns in economic growth and retail sales.
Justin Taylor, head of EMEA retail at Cushman & Wakefield, said: “Improving employment prospects, rising real wages and healthier consumer confidence in advanced economies are set to offer more positive momentum for the retail sector. From an EMEA perspective, despite any economic and political uncertainties in certain countries, the retail market is expected to see further improvements. Indeed, a strong retail sales growth forecast, robust occupier demand and a lack of supply in many locations mean rents will keep rising in the most popular high streets.
“Indeed, tight availability is shaping the retail landscape, pushing the geographic boundaries of well-established high street markets outwards,” Taylor concluded.
The Americas
The US represents seven of the Top 10 most expensive cities in the Americas, with Toronto, Rio de Janeiro and Vancouver at sixth, seventh and eighth, respectively. Seattle posted the highest rent growth in the US, up 27.3 per cent to $70 per sqft, while Los Angeles’ Rodeo Drive corridor posted the highest retail rents outside New York at $800 per sqft, a 23 per cent increase. Strong tourism and a vibrant local economy make San Francisco’s Union Square a market to watch with its 1.1 per cent vacancy, $650 per sqft rents and 13 per cent rent growth, which follows 21 per cent rent growth for the same period through mid-2014. Similarly, Chicago’s Michigan Avenue posted 8.2 per cent rent growth with average retail rents of $525 per sqft.
At $320 per sq. ft., Toronto’s Bloor Street retail corridor was the most expensive high street in Canada, while Edmonton’s Whyte Avenue was the most affordable in the Americas at $45 per sq. ft.
Gene Spiegelman, vice chairman, head of retail services, North America at Cushman & Wakefield, said: “The Americas region is expected to sustain a positive trajectory going forward into 2016, bolstered by a steady consumer sector benefiting from a material reduction in energy costs and stable employment expectations, especially in the US.
“Retailers will continue to add physical stores to support their expansion plans while at the same time optimising their footprint to respond to the ongoing evolution of ‘clicks and bricks.’
“International luxury brands will continue to dominate the high street, providing a boost to the key destination cities with high exposure from tourism and strong foot traffic.”
