New York City Real estate brokerage Colliers International reported Wednesday that luxury retail rents may soon bounce back after two years of decline. Colliers cited newly fueled demand for designer handbags, watches and clothes as reasons for the impending recovery.
According to a report by Bloomberg, rents fell in most of the world’s costliest shopping streets in the first quarter from a year earlier. The average annual rent on Manhattan’s Fifth Avenue, previously the world’s most expensive shopping street in which to lease space, fell about 11% to $1,250 per square foot. That pushed it into second place behind Avenue des Champs-Elysees in Paris.
However, with the global economy set to grow 4.2% this year, according to the International Monetary Fund, the outlook in the luxury sector is decidedly rosier.
“With many of the world’s rich feeling more secure and comfortable with luxury purchases, demand for high-end retail premises is expected to increase over the coming year,” Ross Moore, executive VP and director of market and economic research at Colliers, wrote in the report.
Luxury goods retailers are also attracting “aspirational” consumers from the growing middle classes of Asia, the Middle East and central and Eastern Europe, Moore said.