by Brianna Crandall — January 2, 2015—Hong Kong, New York, Paris, London and Tokyo retained their positions as the world’s most expensive high-street retail destinations in the third quarter (Q3) of 2014, according to new research from global property advisor CBRE Group, Inc.
CBRE’s Global Retail View quarterly ranking of the world’s prime global retail markets saw little change in Q3 2014, with global and hot-growth markets continuing to lead the list. Retailers across all markets continue to target high-end shopping areas and international tourists.
“Even with the somewhat gloomy economic headlines, consumer demand is reasonably firm in most markets,” said Richard Barkham, Global Chief Economist, CBRE. “We can expect to see a continuation of the post-crisis pattern of periods of optimism followed by periods of pessimism. The Americas will see stronger growth than the Eurozone, as the latter has been constrained by restructuring in the banking sector as well as overly tight fiscal and monetary policy. Asia Pacific will record slightly lower growth in 2014 over 2013, but is still expected to outpace the other two regions by a considerable margin.”
The top four cities remained the same, but Tokyo, Zurich and Sydney shuffled positions.(Click on image to enlarge)
According to CBRE, Hong Kong (U.S.$4,327 per sq. ft. per annum) maintained a wide lead over the number-two market, New York ($3,570)—where prime rent along Fifth Avenue is at record levels. Rents in Hong Kong remained stable compared to Q2 2014. A large rental spread also exists between New York and the two leading European markets: Paris ($1,331) and London ($1,328). The gap between the top four markets and the rest of the top 10 widens significantly.
While the top four cities continue to hold their leading positions, there was some movement lower in the top 10 rankings. Rents rose in Tokyo (U.S.$1,076 per sq. ft. per annum), and fell in Zurich ($895) and Sydney ($730), resulting in the cities changing positions this quarter.
North America
In the USA, four of the 12 prime retail corridors tracked by CBRE Research saw quarter-over-quarter increases in prime rents during Q3 2014. Prime asking rents along Rodeo Drive in Los Angeles ($640 per sq. ft. per annum) continue to be the highest in the USA outside of Manhattan, and are expected to record further increases over the remainder of 2014, as there continues to be a lack of available space. Miami (up 3.2% quarter-over-quarter), Washington, D.C. (up 2.2%), and New York (up 2.0%) also reported increasing in prime asking rents in Q3 2014. In Canada, high-street rents were unchanged in Montreal, Vancouver and Toronto, and have remained at their current level since Q4 2013.
Asia Pacific
In Q3 2014, Tokyo continued to lead rental growth in Asia Pacific, with the continued lack of space in major high-street retail locations pushing up retail rents 7.7% quarter-over-quarter. Strong rental growth was also recorded in a number of emerging markets in the region, particularly in India and Vietnam, reflecting the recent resumption of structural economic reforms following the general lack of progress over the past few years. Highlights included a strong 5.9% quarter-over-quarter rental growth in Ho Chi Minh City and a 4.0% growth in Mumbai.
EMEA
According to the research, retailer demand for prime locations in major cities across the Europe/Middle East/Africa (EMEA) region remained firm, but rental growth has tailed off, leaving most markets flat in Q3 2014. Hamburg (up 6.5% quarter-over-quarter) and Munich (up 5.6%) were among the few markets to record growth, reflecting the fact that, despite the recent economic headlines, domestic consumption in Germany remains firm.
