The world’s main shopping streets are proving largely resilient to the global economic downturn with retail rental levels rising or at least remaining stable in 94 per cent of 236 streets monitored. The findings were published by Cushman & Wakefields 23rd annual Main Streets Across the World report which provides a global barometer of the strength and popularity of shopping streets in 48 countries.
New York’s Fifth Avenue is once again the world’s most expensive shopping street where retailers can now expect to pay rents of $1,850 per square foot/€12,612 per square meter of sales space per annum, an increase of 23 per cent on 2007. The most expensive streets in Hong Kong, Paris, Milan and Dublin make up the rest of the top five but London and Tokyo have dropped down to six and seven respectively. Dublin has been the best performer in the top ten with the city’s Grafton Street rising two places in the ranking to enter the world’s top five most expensive streets for the first time. Retailers entering the street can now expect to pay $824 sq ft/€5,621 sq m per annum, a rise of 5.3 per cent on 2007.
Gene Spiegelman, executive director, Cushman & Wakefield New York said: “Through midyear 2008 Fifth Avenue consolidated its position as the world’s most expensive retail address with prime rents around $1,850 sq ft. Ground level retail rents, however, broke the $2,300 sq ft barrier with the lease to Abercrombie at 666 Fifth Avenue. Fifth Avenue continues to deliver the key retail drivers of high turnover and high profile brand positioning in front of international consumers.
“As we close 2008, we anticipate retailers will critically assess substantial rent and capital commitments but will continue to exploit the value of limited prime main street positions in keeping with long term strategies. The subject rents may appear unsustainable at this moment in time but, placed in strategic context, these commitments represent exclusive long term opportunities for a highly competitive group of global retail brands who recognize the value of flagship real estate as an effective vehicle for brand communication. We expect this trend to continue.”
John Strachan, global head of retail, Cushman & Wakefield said: “Demand for often scarce prime retail space on the world’s main streets is being driven by a number of factors. For luxury and high end retailers, a presence on the most prestigious streets is deemed essential for brand positioning, sometimes regardless of how profitable a store might be. Such brand profile helps to drive revenue through other channels such as the internet, and sales of product lines such as perfumes and accessories which are sold more widely.”
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High end international retailers are continuing to expand into new overseas markets and are generally taking a longer term view looking ahead of the economic cycle. This is most clearly the case with relatively emerging markets in all of the world’s regions – Turkey and Russia in Europe, Argentina and Brazil in the Americas, and India in Asia. In India, Mumbai’s Colaba Causeway showed the strongest growth with rents rising over 182 per cent to $269 sq ft/€1,833 sq m per annum. Six out of the ten retail streets in Asia with strongest rental growth were in India.
Image: Saks 5th Avenue