by Brianna Crandall — February 28, 2014—Global property advisor CBRE Group has released findings from its fourth quarter (Q4) research showing that the global office rent cycle reflects “a disparate world,” and that Hong Kong remains the world’s most expensive retail market by a substantial margin.
Global Office Rent Cycle MarketView Q4 2013
The performance of CBRE’s Global Office Rent Cycle during Q4 2013 reflected a disparate world, says the company. Overall, the majority of the 19 markets remained on the upside of the Global Cycle, with only four at the nadir. Seven of the 19 markets moved positions during Q4 2013. However, unlike previous quarters, most movements were not improvements from the viewpoint of property owners. The CBRE Global Office Rent Cycle positions a market’s office rents relative to its unique rent cycle.
Global Retail Rents Fuelled by High-End Brands: Global Retail View Q4 2013
Hong Kong is by far the world’s most expensive city for global retailers, while prime rents in major markets such as New York, Paris and London continue to reach record-breaking levels. CBRE’s quarterly ranking of 97 prime retail locations/markets across the globe shows that competition in the world’s leading cities is getting even stronger. This demand is being fueled by high-end retailers willing to pay record rents for the most coveted shops, while development levels are at historic lows resulting in a shortage of prime retail space.
According to the analysis, Hong Kong (US$4,334 per sq. ft. per annum) is the world’s most expensive location for prime retail rents by a substantial margin, followed by New York ($3,300), Paris ($1,452) and London ($1,356). Rounding out the Top 10 are Zurich ($961), Sydney ($871), Tokyo ($850), Moscow ($739), Melbourne ($732) and Beijing ($681).
Raymond G. Torto, Global Chairman of Research, CBRE, commented, “There has been a lot of discussion about the strength of luxury retailers versus those that serve the mid-market. CBRE’s research provides further evidence that prime retail rents are strong in most markets and rose further in key global markets like New York, London and Tokyo. In many locations, prime retail rents have been buoyed by a shortage of available space in prime market areas and fervent demand from luxury brands. This lack of prime space has pushed some retailers toward secondary assets and markets. With construction levels at or near their troughs in many locations, this trend will likely continue in 2014.”
USA: New York’s Fifth Avenue continued its ascent into record territory during Q4 2013, with the luxury thoroughfare’s average asking rent rising 4.8% quarter-over-quarter to an all-time high of $3,300 per sq. ft. per annum. For a 5,000 sq. ft. space, that would translate to $16.5 million per year in rent. Other prime luxury streets in the Northeast also saw strong growth, with Newbury Street in Boston (up 6.7% quarter-over-quarter) and Walnut Street in Philadelphia (up 5.8% quarter-over-quarter) reporting the largest increases.
