Hong Kong’s Causeway Bay remains the world’s most expensive retail location for the second year running, according to Cushman & Wakefield’s retail research report, Main Streets Across the World.
Although global retail rental growth, at 3.2%, was slightly tempered when compared to the previous 12 months (4.5%), rental values in 285 of the locations surveyed for the report (85%) were either stable or rose.
Fuelled by competition between both high-end and non-luxury retailers for limited space, Causeway Bay experienced a 14.7% growth in rental values and broke through the $3,000 psf barrier for the first time in the survey’s history ($3,017 psf).
After being toppled from pole position for the first time in 11 years by Causeway Bay in 2011, Fifth Avenue in New York saw rental values remain static but still held onto second place in the ranking with $2,500 psf — and this was almost $900 s/f ahead of its nearest rival: Paris’ Avenue des Champs-Élysées, which placed third with $1,601 psf.
However, the French location extended its lead over other locations significantly by recording 38.5% growth, the third strongest rental rise globally.
With continued demand from international luxury brands, rents in London’s New Bond Street increased by 15.6% to $1,047 psf as the location jumped from sixth to become the fourth most expensive shopping street in the world, replacing Ginza ($984 psf) in Tokyo which moves down into fifth place this year.
The other highest climber in the ranking’s top ten was Via Montenapoleone in Milan ($906 psf) which witnessed a 7.4% rise in retail rents and moved up the table from eighth to sixth.
Cushman & Wakefield’s global head of retail, John Strachan, said: “Once again, we have seen Fifth Avenue and Causeway Bay retain their titles as the most expensive retail locations in the world. But we have also seen positive growth across almost all of the top global cities as international brands continue to compete for premier positions in the world’s most highly sought after shopping streets.”
Martin Mahmuti, a senior analyst in Cushman & Wakefield’s European Research Group, said: “Economic risks remain for 2014 but conditions are expected to steadily improve across most markets.
“The retailers’ push towards the best and most sought-after locations will continue; however, limited supply and higher rental costs will create obstacles for some brands, leading a number to look to alternative locations in close proximity to the main thoroughfares.
“While cities will grow in importance, a stronger focus on the use of all channels including online will also be seen to both speed and support expansion.”
Despite being partly affected by slower economic activity and in some cases increased retail supply, the Americas showed the strongest regional growth with prime rents increasing by 5.8%. But this was down on the 10.9% rise recorded in 2011/2012.
Prime rental growth in the US was somewhat more restrained (3.7%) compared with 2011/2012, while Canada achieved a marginal prime rental increase of 1.7%.
Colombia recorded the strongest growth among the Americas overall as values surged by 14.6%, while Argentina experienced an uplift of 11.5% over the year. In neighboring Brazil (3.3%), retail space improved dramatically with the addition of over 40 shopping centers.
The Mexican (7.7%) retail landscape benefited from a recovery in demand but also suffered from a shortage of high quality retail space.
Trading conditions in Chile remain healthy, with positive annual retail sales growth stretching to four uninterrupted years in September 2013.