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Retail Rents Rise in the World’s Most Expensive Shopping Destinations

Retail Rents Rise In The World's Most Expensive Shopping Destinations

  • Causeway Bay, Hong Kong overtakes Fifth Avenue, New York as the most expensive retail destination in the world, with the latter losing first spot for the first time in 11 years.
  • Avenue des Champs-Élysées, Paris witnessed strong rental growth and replaced Ginza Tokyo in third place.
  • Global retail rents remained resilient overall, recording a 4.5% average increase for prime locations.
  • International luxury retailers continue to drive demand for space in the top destinations.
  • South America showed the strongest rental uplift by region, with prime rents increasing by 11.6%.

'Despite a backdrop of a slower global economy and continued uncertainty - notably surrounding the euro zone – global prime retail markets have proved generally resilient over the year to June, with rental growth driven in particular by a strong performance in Asia and the Americas.' according to Cushman & Wakefield's latest Main Streets Across the World report launched today.

Of the 326 prime locations in 62 countries surveyed for the report, a total of 147 saw rents increasing with just 49 (15%) experiencing rental declines, compared with (19%) in 2011.

Hong Kong's Causeway Bay driven by a surge in demand and leasing activity experienced a 34.9% hike in rental values to US$2,630 sq ft overtaking Fifth Avenue in New York at US$2,500 sq ft, as the most expensive retail destination in the world - the first time Fifth Avenue has not been top in 11 years.

The biggest climber in the top ten was Avenue des Champs-Élysées in Paris at US$1,129 sq.ft, which jumped two places into third spot, leaving Ginza Tokyo in fourth place US$ 1,057 sq ft.

Luxury retailing continues to fuel trading and rental growth across prime pitches of the global market. Luxury retailers are competing for the most coveted shopping destinations, exerting upward pressure on prime rental values. Despite recent slower sales growth, the luxury sector will remain resilient and continue to play a vital and prominent role in driving overall performance in the world's premier locations.

Martin Mahmuti - Analyst, European Research Group: 'Looking ahead, the main drivers behind global growth are not expected to shift significantly - with growing structural demand in tier 1 locations, market globalisation and luxury expansion in key developments. Asia Pacific and South America will remain the main focus of many international retailers as they take advantage of new modern supply and gradually maturing retail markets, but with new policies aimed at supporting retail, in India and China among others, potentially altering growth dynamics.'

John Strachan - Head of Global Retail Services, 'There has been the usual jostling for the top positions between Hong Kong and New York but of course the real message here is the unfaltering advance of the top global cities, fuelled by a shortage of supply and the interest of international brands.'


The Americas showed the strongest rental growth of all regions. Prime rental rises in North American locations were driven by the strong performance of the US (16.3%) and Mexico (11.5%), while Canadian values recording a marginal uplift.

Conditions in the US retail market improved over the year as sales and leasing activity picked up - albeit mainly in the prime segment. However, further falls in vacancy rates and limited new supply on the market could see the overall rental rate increase over the next 12 months for the first time since 2008.

Buoyed by rises in emerging markets, rental growth in South America improved (11.6%) on 2010/2011 figure and surpassed all other regions. Brazil was yet again the engine of growth not only in economic activity but also in prime retail rents. Indeed, the city of Rio de Janeiro witnessed exceptionally strong uplifts, with rents surging by 64.7% in the highly sought after area of Garcia D'avila (Ipanema).

The Americas ranking of the top 10 most expensive locations was again dominated by destinations in the United States, with Fifth Avenue leading the way as the priciest street. However, there were a number of movements; most notably, Times Square - a new addition to this year's survey - was firmly in second place as it recorded rental growth of 55.6%, with Madison Avenue and East 57th Street sharing third spot.

Matt Winn, Senior Managing Director, Head of Retail Services, Americas 'The last year saw continued strong rental growth across the Americas led by the recovering economy and strong demographic trends in the US and Latin America. Given current demand for urban units from a broad range of retailers we expect this trend to continue in prime areas as well as secondary locations throughout the region. Supply constraints in key markets may in fact limit growth going forward as demand remains higher than available supply in many major markets.'


Despite a slight deceleration in regional growth rate in Asia Pacific to 8.6% compared with 12.2% in 2011, occupier demand in the region remained robust, with retailers eager to tap into a generally younger but increasingly affluent middle-class. Asia Pacific also 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.

The highlight of this year's survey was Hong Kong with advance 21.8% as a result of extremely active demand from a diverse group of new international retailers, expansion plans from existing brands and very limited availability. Indeed, notwithstanding slowing economic activity, retailers continued to see the market as the ideal launching platform into mainland China.

Prime rents in India rose by 12.5% on the back of strong occupier demand across all sub-sectors, however, some retailers were increasingly favouring high street properties at the expense of shopping centres, evidenced by the 75.0% increase in rents in Colaba Causeway in Mumbai - the highest increase globally.

Causeway Bay, Hong Kong was the most expensive retail location in Asia Pacific, widening the rental difference on second placed Central, Hong Kong further.

Michele Woo, Senior Director, Retail Transaction Services, Cushman & Wakefield, Hong Kong, 'The highlight of Asia this year was Hong Kong where we saw prime rents surge by 21.8% as a result of a strong demand from diverse group of new international retailers and the scarcity of available space. However, the recent announcement of a new duty on foreign home buyers has led to a further shift to retail property investment in HK. In addition, there is a slowing in leasing activity in the past month as retailers adopt a wait and see approach towards year-end. Notwithstanding this, Hong Kong will remain the ideal launching platform into China for international retailers although we are unlikely to see these very high levels of rental growth sustained. Overall we expect retail activity Asia Pacific will remain healthy as international retailers struggling to generate profitable trading in their own markets, look for expansion opportunities in the region.'


The retail sectors performance across the region remained deeply polarized over the past year, with premier locations in most large cities attracting good demand from international luxury brands. At the same time, even in stronger cities, secondary pitches are still struggling on the back of rising availability and weak consumer sentiment.

EMEA prime values were up by 1.7% in the year to June, boosted by the continued demand from international fashion brands and the luxury sector. Prime rents in 25 of the 31 European markets surveyed saw rents remain stable or increase, whilst they fell noticeably in countries affected by austerity measures e.g. Greece (17.1%), Ireland (15.1%) Hungary (13.3%), or by increasing supply e.g. Bulgaria (7.7%).

The prime segment of core European markets witnessed dynamic activity, underlined by a rental uplift of 14.6% in France achieved through impressive double-digit rises, primarily in luxury driven locations. Other core markets saw positive growth although at a gradually more moderate trend; United Kingdom (6.3%), Italy (5.4%) Germany (4.7%), the Netherlands (4.5%) and Spain (2.0%)

Avenue des Champs-Élysées, Paris was again the most expensive retail location in the EMEA region, recording rental growth of 30.0% over the year and widening the rental difference on second placed New Bond Street, London.

Pierre Raynal, Head of Retail Agency France, said 'Over the past few months, strong international retailer demand continued to boost the main thoroughfares of Paris. The Champs-Elysées in particular, which in 2011 saw the grand openings of Marks & Spencer, Abercrombie & Fitch and Banana Republic has remained in the spotlight in 2012 with the opening of Levi Strauss, Kusmi Tea and the refurbishment of Hugo Boss flagship stores. With tourist numbers expected to grow further in the next few years Paris, one of Europe's key gateway cities, will continue to benefit from strong retailer demand. Luxury players will remain a fundamental driver of the city's property market and Champs-Elysées will remain at the heart of this, with the opening soon of a new Tiffany's flagship store for example. Despite a recent slowdown, the resilient performance of much of the luxury sector and the record number of tourists from emerging countries suggests that this trend will continue in 2013, with prime rents expected to remain under upward pressure due to scarcity of supply.'