Luxury good demand is a driver for more expensive retail rentals

Luxury good demand is a driver for more expensive retail rentals

The already high retail space rents in the world’s most expensive shopping destinations are further increasing retail rents

Two recent reports of Cushman & Wakefield (USA, a global specialist in designing, creating and managing real estates and shopping centres) indicate a slight change in the ranking of the most expensive shopping destinations: Causeway Bay in Hong Kong has been overtaking Fifth Avenue in News York (USA) and the latter has been losing its first spot for the first time in 11 years! Avenue de Champs-Élysées, Paris (F) witnessed strong rental growth and is superseding Ginza Tokyo (J) in third place.

Global retail rents (midyear 2012) remained resilient overall, despite a backdrop of a slower global economy and continued uncertainty, especially surrounding the Euro Zone, and are recording a 4.5 % average increase for prime locations. International luxury retailers continue to drive demand for space in the top destinations. The strongest rental uplift took place in South America with prime rents increasing by 11.6 %.  

Of the 326 prime locations in 62 countries survey for the report “Main Streets Across the World”, a total of 147 saw rents increasing with just 49 (15 %) experiencing rental declines, in 2011 the figure was 19 %.

Hong Kong’s Causeway Bay has been driven by a surge in demand and leasing activity experienced a 34.9 % hike in rental values to US 2630 sq ft, followed by Firth Avenue in New York at USD 2500 sq ft. The biggest climber however in the top ten was Avenue des Champs-Élysées in Paris (F) with +30.0 %  to USD 1129 sq ft, leaving Ginza Tokyo (J) in fourth place with USD 1057 sq ft and widening the rental difference on second placed New Bond Street, London (GB). In rank four we find Bahnhofstrasse in Zurich (CH) with a rental increase of 8.7 %.

The Americas showed the strongest growth of all regions, the prime rentals in North American locations were driven by the strong performance of the USA (16.3 %, Fifth Avenue, Times Square (55.6 %), Madison Avenue and East 57th street, all in New York) and Mexico (11.5 %), while Canadian values had only a marginal uplift. Rental growth in South America improved by 11.6 %, and there the engine of growth was Brazil and particularly in Rio de Janeiro where rents were surging (64.7 % in the area of Garcia D’avila (Ipanema).

Asia Pacific had a slight deceleration from 12.1 % to 8.6 % but occupier demand in the region remained robust, with retailers eager to tap into a generally younger but increasingly affluent middle-class. And the region contained five of the 10 most expensive global locations and operators continued to compete for the limited prime space in the coveted destinations of Hong Kong and South Korea. Hong Kong showed an advance of 21.8 %. Prime rates in India rose by 12.5 % on the back of strong occupier demand across all sub-sectors, some retailers were increasingly favouring high street properties at the expense centres, evidenced by the 75 % increase in rents in Colaba Causeway in Mumbai, the highest increase globally.

The Europe, Middle East and Africa region remained deeply polarised, with premier locations in most large cities attracting good demand from international luxury brands. The prime values were up by 1.7 %, boosted by the continued demand from international fashion brands and the luxury sector. Prime rents in 25 of 31 European markets surveyed saw rents remain stable or increase, whilst they fell noticeable in countries affected by austerity measures: Greece (17.1 %) Ireland (15.1 %), Hungary (13.3 %), or by increasing supply: Bulgaria (7.7 %). The prime segment of core European markets witnessed dynamic activity, underlined by a rental uplift of 14.6 % in France. Positive trends were noted but at a gradually more moderate trend, such as Great Britain (6.3 %), Italy (5.4 %), Germany (4.7 %), the Netherlands (4.5 %) and Spain (2.0 %).

www.cushwake.com


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.