TOP MAIN STREETS ACROSS THE WORLD

ohn Strachan, global head of Retail, gives an overview of the main findings in Cushman & Wakefield’s annual Main Streets Across the World report which provides a global barometer of the strength and popularity of shopping streets in 44 countries.  New York’s Fifth Avenue remains the world’s most expensive retail address. London’s New Bond Street overtakes Paris’s Avenue des Champs-Elysées as Europe’s most expensive. Hong Kong’s Causeway Bay is still the most expensive in Asia Pacific Latin America and Asia-Pacific lead global growth in retail rents. Most of the world’s top retail locations have remained resilient during the last twelve months, with Latin America and Asia-Pacific showing the most positive rental growth, according to Cushman & Wakefield. Around two-thirds (66%) of the 59 countries surveyed by the real estate adviser for its annual Main Streets Across the World report reported prime rents either rising or remaining static over the year to June. The findings paint a brighter outlook to those of 2009, which revealed the biggest global fall in rents in the report’s 25 year history. Main Streets Across the World provides a global barometer of the retail sector, tracking rents in the world’s top 269 shopping locations across 59 countries. The league table is drawn up by taking the most expensive location in each of the countries monitored.  New York’s Fifth Avenue, where rents increased by 8.8%, kept its number one spot as the world’s most expensive retail address, for the ninth year running. Causeway Bay in Hong Kong remained at second place.

London’s New Bond Street leapt two rankings, to overtake Avenue des Champs-Elysées in Paris – the biggest faller in the top ten with a 9.5% rental decrease – as the most expensive location in Europe. The emerging markets performed strongly due to strong tourism and demand from international retailers. Brazil’s Haddock Lobo street in Sao Paulo was the biggest riser globally, with rents increasing by 92%. Ginza in Tokyo, Japan, climbed from fifth in the league table last year to third this year and South Korea’s Myeongdong in Seoul jumped three places from eleventh to eighth.  Of all the locations in Europe that were monitored, London’s New Bond Street was the biggest riser, with a 19.4% rental increase.

In Asia-Pacific, India’s Linking Road in Mumbai showed the strongest growth, with rents rising by 33%. Around the world, the biggest fall in rents was in Bulgaria with a 50% drop in Alexander Batenbeg, Plovdiv, and in Alexandrovska, Burgas. Europe as a whole registered a decline in rents of 4.5%. Ireland’s Grafton Street in Dublin tumbled from eighth to thirteenth, with rents dropping by 25.8%, and Ermou in Athens, Greece, plummeted seven rankings with a 15.4% rental decline. This year’s findings reveal a clear polarisation between prime and secondary locations. Secondary locations have been much more adversely affected by the fall-off in retailer demand and consequent decline in rents, as retailers move quickly to close unprofitable stores and rein in expansion.

John Strachan, Global Head of Retail, Cushman & Wakefield, said: “The aftershocks of the global economic recession are still being felt in the retail property market and the path leading from recession to recovery has been far from smooth. In the more mature markets, occupiers are expected to remain cautious and selective about the space they take. However, on the great shopping streets of the world, in cities such as London and New York, demand has continued to exceed supply and the appetite of international brands has resulted in rental uplift. The emerging economies look set to experience significant growth in the retail sector, thereby boosting demand for good quality, well-located property. At present, Asia-Pacific has the best growth prospects.” Retailers on New York’s Fifth Avenue can expect to pay $1,850 per sq ft per annum. Gene Spiegelman, Executive Vice President, Cushman & Wakefield New York, said: “Despite ongoing domestic and international economic pressures, Fifth Avenue continues to represent a highly desirable global branding opportunity for major retailers.

With New York’s attraction as such a popular destination for domestic and international tourism, Fifth Avenue is able to maintain the top position for companies that want to project or maintain their brands on the global stage.” New Bond Street, where retailers can expect to pay $836 per sq ft per annum, jumped to the most expensive street in Europe. Peter Mace, Head of Central London Retail, Cushman & Wakefield, said: “New Bond Street remains one of the most sought after locations in the world for luxury brands and, due to the significant imbalance between supply and demands, the thoroughfare continues to witness significant rental growth. The recent letting of 169 New Bond Street to Piaget represented a record rent for the street with the new tenant also contributing a significant premium to secure vacant possession. There were four under-bidders for the store. This trend is likely to continue for the foreseeable future on the basis that there are still a large number of retail requirements that remain unsatisfied.. Avenue des Champs-Elysées in Paris fell one ranking to the second most prestigious location in Europe. Christian Dubois, Head of Retail Services France, Cushman & Wakefield, commented: “The strong resistance from the Municipality to grant approvals to new fashion retailers, the mismatch between the availability of large spaces and requirements for smaller stores from international retailers, combined with negative indexations of the rents, have all contributed to the lower ranking of Champs Elysées. However, the future openings of H&M, Abercrombie & Fitch and Tommy Hilfiger have attracted great interest from new brands across the world and we are seeing severe competition for few opportunities once again. Together with the new trading laws allowing retailers to trade seven days a week, we expect rental values to rise again in the short term.” Brazil and South Korea both performed strongly due to strong tourism and demand from international retailers.  Mariana Mokayad Hanania, Manager – Research Services, Cushman & Wakefield South America, said: “The sharp increase in Brazil’s GDP in Q1 2010, confirmed that the country is in a cycle of economic growth based on the solid economic indicators of the first half of the year, both in terms of output as well as domestic demand. The overall retail sales increased about 13.5% in the first quarter and retail rents on the whole have been well supported by the increase in household consumption, jobs and wages. Most of the Brazilian luxury market (70%) is concentrated in Sao Paulo. There has been a growth in demand for stores on Oscar Freire, H. Lobo and Lorena streets, as well as in Shopping Iguatemi; where most of the luxury brands want to be located. Availability in these areas is extremely reduced and asking rents are continually increasing.” Mark Burlton, Cross Border Retail Partner EMEA & Asia, Cushman & Wakefield, said: “The recent rise of Korea in the list is largely a result of its general economic recovery fuelled mainly by a very strong export market which saw a 7.2% rise in the second quarter of 2010. Consumer expenditure initially lagged behind these optimistic figures but recent increases in dining out, clothing and footwear consumption give further confidence. Retail rents have returned to pre-credit crunch numbers with prime areas such as Myeongdong and Gangnam Station showing an average 17% increase this year. Global brands such as H&M and Zara have opened in prime locations having out-bid local retailers and the rapid rise in low and mid-priced cosmetics companies have also driven rents upwards. These trends are likely to continue in the near term as demand is still very much outstripping supply.” Anthea To, Retail Analyst, Cushman & Wakefield, said: “As we move in to 2011, the global economic outlook looks likely to remain uncertain and concerns remain that the recovery will stall. A lack of clarity in future conditions is clearly holding some retailers back and preventing a stronger recovery taking hold. A consensus is emerging that growth next year will be more modest than originally forecast. Nonetheless, the more savvy operators have been active through the low point in the market, leasing space and securing good deals from landlords, which will enable them to take full advantage of a more sustained economic recovery once it kicks in.”