New York City -- A report released Wednesday by CB Richard Ellis found that New York City remains the world’s most expensive retail destination as retailers focus on the major fashion capitals, pushing global rents in prime locations even higher.
According to the latest CBRE Global Retail MarketView, the improving economy has had a measurably positive impact.
“Retail spending in the Americas continues to grow as consumer confidence and employment levels improve,” said Anthony Buono, executive managing director of CBRE Retail Services. “While retailers are taking a considered approach to expansion, the activity in High-Street Markets such as New York still shows an increased demand in traditionally strong locations.”
New York’s 5th Avenue remains the world’s most expensive high street destination, with rental values reaching $1,900 per square foot per annum in the first quarter of 2011 — an increase of more than 10% on the same period last year. There was little change in the CBRE global retail rent rankings from the previous quarter, with the exception of Hong Kong, which moved up to second-most-expensive following a rental hike of 46% quarter-on-quarter due to several high-profile leasing deals.
Sydney ($1,301/sq. ft./annum) dropped to third position due to flat growth year-on-year, while London’s West End ($909/sq. ft./annum) held fourth position. Zurich rose to fifth position after experiencing rental growth of 9% to $829/sq. ft./annum.
The overall total of rents recorded by CBRE grew by 1.9% in the first quarter of 2011 and by 3.8% year-over-year. Rental levels grew by 6.9% year-over-year in the Americas as spending increased and consumer confidence and employment levels improved.
“The recovery in the global economy is multi-speed — economic growth continues to be strong in Latin America and Asia Pacific, but is much weaker in Europe and North America. In the developed economies, the ability to maintain interest rates at a level that will encourage sustainable economic growth, while also keeping a lid on inflation, will be the key challenge,” said Ray Torto, global chief economist, CB Richard Ellis. “It remains a testing time for retailers, particularly in developed markets, where fewer new shopping venues are making it more difficult for retailers to access the prime space they require. Not only is this putting upward pressure on rents in the most sought after locations, it is also forcing retailers to extend their search criteria and consider taking non-prime locations.”