Main streets across the world – Hong Kong’s Causeway Bay has retained its crown as the world’s most expensive shopping street with London’s New Bond Street taking the title for the costliest place in Europe to locate a retail store.
Our annual ‘Main Streets Across the World’ report tracks rents for 448 locations across 68 markets – the largest number ever included since it started in 1988. The report ranks locations by their prime rental value using Cushman & Wakefield’s proprietary data.
Last year Causeway Bay ended five years of domination by New York’s Upper 5th Avenue and in the 2019 rankings, it retains its position with rents to locate a store amounting to $2,745 per sq ft/ year (EURO 25,965 per sq m/yr). Upper 5th Avenue is in second place at $2,250 psf/yr (EURO 21,295 psq m/yr), with London’s New Bond Street third in the global list, with annual rents at the London thoroughfare having risen 2.3% in the past 12 months to $1,714 per psf/yr (EURO 16,222 psq m/yr).
The Avenue des Champs Elysées in Paris ($1,478 psf/yr / EURO 13,992 psq m/yr) and Milan’s Via Montenapoleone ($1,447 psf/yr / EURO 13,700 psq m/yr) complete the top five. The biggest rental rise in the top 10 saw Sydney’s Pitt Street Mall increase rents by a colossal 17.9% over the past 12 months to reach $1,076 psf/yr (EURO 10,185 psq m/yr). Five of the top 10 global streets were in Europe, with four in Asia and just one in the US.
Report author Darren Yates, Head of EMEA Retail Research at Cushman & Wakefield, said: “In terms of rental performance, this year’s results are encouraging and demonstrate the resilience of the premier retail locations. Rents on the world’s top retail streets have been fairly stable and there is greater clarity on where retail is heading. However, there is downward pressure on rents in many weaker locations, particularly in the more mature markets of Europe and North America. In Asia Pacific, retail has generally performed well across a very diverse group of markets.
“Online sales continue to increase around the world, but while much of the narrative is focused on the challenges the internet poses for traditional bricks and mortar, the relationship between the two is more complex. While quantifying the value of the store has become more difficult, it remains an important touchpoint for the consumer and generates both in-store and online sales by acting as a showroom and creating a wider brand presence – the so-called ‘halo effect’. The most successful retailers will be those who best integrate their physical and online operations to create a seamless, positive brand experience for shoppers.”
From a European perspective, New Bond Street leads the way ahead of Paris and Milan, with Zurich’s Bahnhofstrasse at $866 psf/yr (EURO 8,195 psq m/yr) and Vienna’s Kohlmarkt at $513 psf/yr (EURO 4,860 psq m/yr) completing the top five. Dublin’s Grafton Street comes in at number 7 of the top 10 European streets at $401 psf/yr (EURO 3,794 psq m/yr). Among the top 10, Ermou in Athens saw the biggest rental rise of 14% to reach $361 psf/yr (EURO 3,420 psq m/yr). Overall, rents in around 70% of locations in Europe were stable or up on last year. Polarisation is evident, however, between the more established markets of North Western Europe and Southern, Central and Eastern Europe, where modern supply is lower and online sales have yet to really accelerate.
Boris van Haare Heijmeijer, Head of EMEA Retail at Cushman & Wakefield, said: “Even at the top end of the luxury market, retailers are having to work harder than ever to increase or maintain customer footfall. This means diversifying their offer away from just pure sales or transactions. Customers want a destination or attraction as part of their brand experience and that means adding other services or partners such as food and drink or leisure activities. We expect this type of brand extension to continue as retailers seek to maintain the attention of their customers and to stay relevant.”
The Asia Pacific region is in a relatively strong position, with rents in over 80% of locations covered either rising or stable. India recorded a particularly strong performance, with solid rental growth across several cities, while retail rents in Hong Kong have been resilient in the face of the recent protests – although the outlook is more uncertain.
In the Americas rental trends have shown a wide degree of variation. Rents in Canada and the US remain under pressure in many areas, although there can be significant variations between individual streets. There is some good news in that rents in New York streets appear to be stabilising, following falls in recent years. Latin American retail markets continue to mature, although rents can be volatile.
The main trend has been a marginal decrease in prime rents in the major cities, with a growing polarisation between prime and secondary locations and small and larger units. A number of opportunistic retailers have been successful at renegotiating rents in the best locations, while larger units are increasingly difficult to let. The Food & Beverage sector is extremely active and the wider market is seeing considerable innovation, with the emergence of new formats, concepts and technologies. While Belgian retail is undergoing structural change, it is clear that the physical store will continue to play a major role in the retail landscape.
Activity on the high street has been more muted than for shopping centres and retail parks and prime rents have recently softened, with a significant proportion of demand having been absorbed by Galeries Lafayette and the Cloche d’Or shopping centre. However, the opening of the Royal Hamilius development in 2019 is expected to give a boost to rents in the medium term, while the recently opened Cloche d’Or scheme has led to increased leasing activity, with more than 100 retail units complementing the Auchan supermarket.
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