London, 2 March –Hong Kong is by far the world’s most expensive
city for global retailers while prime rents in
major markets such as New York, Paris and London continue to reach
record-breaking levels, according to
new research from global property advisor CBRE Group, Inc.
CBRE’s quarterly ranking of 97 prime
retail locations/markets across the globeshows that competition in the world’s leading
cities is getting even stronger. This demand is being fuelled by high-end
retailers willing to pay record rents for the most coveted shops, while development
levels are at historic lows resulting in a shortage of prime retail space.
Australia is the
only country with two cities in the top 10 – with Sydney and Melbourne
featuring in six and ninth places respectively.
Hong Kong (US$4,334 per sq. ft. per annum) is the world’s most expensive
location for prime retail rents by a substantial
followed by New York (US$3,300 per sq.
ft. per annum),
Paris (US$1,452 per sq. ft. per annum) and London
(US$1,356 per sq. ft. per annum).
prime rents, as measured in local currency, posted double-digit increases in
several key global markets during 2013, led by Paris, London and New York,
which saw year-over-year growth of 29%, 18%
and 11%, respectively, from levels that were already in the stratosphere.
Source: CBRE Research, Q4 2013
Raymond G. Torto,
Global Chairman of Research, CBRE, commented:
has been a lot of discussion about the strength of luxury retailers versus
those that serve the mid-market. CBRE’s research provides further evidence that
prime retail rents are strong in most markets and rose further in key global
markets like New York, London and Tokyo.
“In many locations,
prime retail rents have been buoyed by a shortage of available space in prime
market areas and fervent demand from luxury brands. This lack of prime space
has pushed some retailers toward secondary assets and markets. With
construction levels at or near their troughs in many locations, this trend will
likely continue in 2014.”
Competition for high
street retail space in Sydney remains
strong due to healthy demand from international retailers and limited
availability. The bulk of new supply pipeline is attached to the Barangaroo
office development; however, the first phase will not be completed until 2015. Australia
is the only country with two cities featuring in the top ten highest retail
rents with Melbourne ranked ninth. Melbourne became a hot landing spot for fast
retailers during 2013, headlined by the first Australian stores of UNIQLO, H&M and Forever 21.
CBRE’s National Director of Retail Services, said that the Sydney CBD retail landscape is relatively stable with several new
store openings planned for the coming months.
“Martin Place has seen recent openings on Rolex and Brietling, with
Brooks Brothers also coming soon. Pitt
Street Mall is also undergoing a shake-up, with both Uniqlo and Forever 21
rumoured to have secured sites here,” said Mr Palmer.
“H&M are bucking
the trend and leaning towards a site on George
Street close to Burberry and Louis Vitton, no doubt the proposed light rail
pedestrianisation of George Street swaying their decision.”
demand in Hong Kong is focused on
prime locations rather than secondary streets. The most sought-after prime
streets are Russell Street in Causeway Bay, Canton Road in Tsim Sha Tsui, and
Queen’s Road Central in Central. These locations – which all recorded very
tight vacancy – continue to attract both global and local retailers.
Fifth Avenue continued its ascent into record territory during Q4 2013, with
the luxury thoroughfare’s average asking rent rising 4.8% quarter-over-quarter
to an all-time high of US$3,300 per sq. ft. per annum. For a 5,000-sq.-ft.
space, that would translate to US$16.5 million per year in rent. Other prime luxury streets in the northeast
U.S. also saw strong growth, including Newbury Street in Boston (up 6.7%
quarter-over-quarter) and Walnut Street in Philadelphia (up 5.8%
quarter-over-quarter) reporting the largest increases.
The retail market in France was characterized
by heavy polarisation, with substantial demand focused on prime space,
especially in and around Paris. Significant
interest from international retailers for the limited amount of available prime
locations in Paris has resulted in steady rent growth over the past two years,
with Paris’ average prime asking rent up 80% since Q1 2012. Sustained demand
from international retailers will continue to support high street rents in
Strong demand for prime retail pitches in London has pushed rents to record levels.
The luxury sector is a huge driver of exponential rental and key money
growth. The limited availability of
space compared to demand for prime streets has led to increased demand for
space on secondary pitches in central London. However, the UK market is heavily
polarised with poorer secondary shopping centres and high streets suffering
increasing levels of vacant space and falling rents.
A recovery in the
Japanese economy, a rebound in the stock market and anticipated growth in wages
has translated into the highest consumer confidence since 2005. Big ticket
items in department stores and luxury products both reported promising sales
growth. Tokyo remains one of the key
gateway cities for retailers that are new to Asia Pacific. With luxury brands seeking
to expand and domestic retailers willing to try new locations, leasing activity
has spread to peripheral areas such as the Jinnan area in Shibuya.
Rental growth in Moscow high streets has remained stable throughout 2013. Demand for
space remains steady, but the structure of the retail market is changing. The
ratio of fashion retailers in high streets continues to decrease as the
majority of Muscovites prefer purchasing clothes and footwear in shopping
malls. Moscow is also set to see a significant number of new large scale
shopping malls being delivered to the market.
Global retailers continue to seek prime retail
space in Beijing with designer brands
3.1 Phillip Lim and Cheap Monday opening their first China
standalone stores. Fast fashion brands are seeking opportunities in core
submarkets, while food and beverage operators are increasingly popular with shopping
mall landlords, especially those in secondary locations due to their ability to
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue). The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website atwww.cbre.com.au.