New York’s Upper Fifth Avenue is the most expensive retail street in the world with rents rising to US$3,500/sq. ft. in 2015, which is nearly 50 percent more expensive than second place Causeway Bay in Hong Kong, according to a global research report out today from Cushman & Wakefield.
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 utilizing Cushman & Wakefield’s proprietary data. The 27th edition of the report shows that rents have risen in 35 percent 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.
Once again, New York’s Fifth Avenue retained its position as the most expensive global retail location. By the second quarter of 2015, rents reached US$3,500/sq. ft., an increase of 3.6 percent year over year and 46 percent above the second-placed Causeway Bay in Hong Kong (US$2,399/sq. ft./year).
Regionally, the United States 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 U.S., up 27.3 percent to $70 per sq. ft., while Los Angeles’ Rodeo Drive corridor posted the highest retail rents outside New York at $800 per sq. ft., a 23 percent increase. Strong tourism and a vibrant local economy make San Francisco’s Union Square a market to watch with its 1.1 percent vacancy, $650 per sq. ft. rents and 13 percent rent growth, which follows 21 percent rent growth for the same period through mid-2014. Similarly, Chicago’s Michigan Avenue posted 8.2 percent rent growth with average retail rents of $525 per sq. ft.
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 U.S. Retailers will continue to add physical stores to support their expansion plans while at the same time optimizing 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.”
Global high street retail destinations include:
Fifth Avenue (New York) - US$3,500/sq. ft./year
Causeway Bay (Hong Kong) - US$2,399/ sq. ft./year
Avenue des Champs Élysées (Paris) - US$1,372/sq. ft./year
New Bond Street (London) - US$1,321/sq. ft./year
Via Montenapoleone (Milan) - US$1,035/sq. ft./year
Bahnhofstrasse (Zurich) - US$894.6/sq. ft./year
The Ginza (Tokyo) - US$881.9/sq. ft./year
Myeongdong (Seoul) - US$881.8/sq. ft./year
Kohlmarket (Vienna) - US$478.2/sq. ft./year
Kaufinger / Neuhauser (Munich) - US$459.6/sq. ft./year
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.
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 percent over the next five years (in U.S. dollar terms). Rising tourist numbers are spurring robust and sustained retailer demand – albeit firmly focused on prime, well-located space. Although the growth of e-commerce 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.”