Retail Rents in New York, London, Tokyo and Zurich on the Rise
*The Japanese translation of this release was disseminated in Japan on the date above. Please note that the original version of this release was announced in English on August 19.
London – August 19, 2013 – Hong Kong is by far the world’s most expensive city for global retailers, but prime rents in New York, London, Tokyo and Zurich are on the rise, according to new research from global property advisor CBRE Group, Inc.
CBRE’s quarterly ranking (Q2 2013) of the top 10 prime global retail markets saw little change relative to previous quarters; however, four of the top 10 markets - New York, London, Zurich and Tokyo - saw quarter-over-quarter increases in prime retail rents, compared with only one city during the previous quarter. Historically low construction levels and fierce retailer competition for the best locations is fuelling this growth, leading to record-breaking rents.
Hong Kong (US$4,328 per square foot per annum) tops the rankings by a substantial margin, with New York ($3,050 per sq ft) in second position posting prime rents at $1,200 per sq ft below. Similarly, a large spread of more than $1,800 per sq ft per annum exists between New York and third-ranked Paris.
Despite its high rents, retailers continue to establish a presence in Hong Kong, seeking to benefit from the market’s unparalleled luxury retail scene. According to CBRE research, 51 new retailers opened stores in Hong Kong last year and the city has the highest representation of luxury retailers of all global markets.
Joe Lin, Executive Director Retail, Hong Kong, CBRE, commented:
“Healthy tourist arrivals and lack of available space make finding an adequate unit in Hong Kong’s prime retail locations a major challenge for new and existing retailers. Units in prime locations with wide shop fronts and large ground floors rarely become available, leaving retailers with few choices. As such, preference for spaces with these characteristics continues to generate strong demand, supporting the market’s high - and rising - prime rent levels.”
New York displayed a 2.7% quarterly growth rate in prime retail rent levels, signifying a 22% annual increase relative to last year. Demand from international retailers remains strong in New York and tourism levels continue to drive strong retail sales activity.
In London($1,156 per sq ft), improving consumer confidence, robust sales and increased footfall have collectively fuelled tenant demand. In particular, the supply and demand imbalance on New Bond Street and Old Bond Street resulted in prime rents for Central London increasing by 9.1% quarter-over-quarter and 20% year-over-year, as measured in local currency.
Preference for prime space continues to impact prime rents in Zurich ($896 per sq ft) where rents increased 2.2% quarter-over-quarter and 5.6% year-over-year.
The tight supply of prime space, as well as the gradually strengthening confidence of occupiers contributed to a 2.0% quarter-over-quarter local currency rental increase in Tokyo. Viewed as the gateway to Asia by many foreign retailers, competition to acquire prime locations across Tokyo remained fierce. Domestic retailers have also expanded, with some Osaka-based retailers expanding their presence in the city for the first time.
Junichi Taguchi, managing director of CBRE’s Retail Services division in Japan, commented:
“Consumer demand and confidence conditions have notably improved thanks to “Abenomics”. Luxury retailers noted a positive push in demand for brand items, which have been recording high sales values, in department stores, since the beginning of the year.”
Prime rents in Sydney ($945 per sq ft), Melbourne($794 per sq ft), and Brisbane ($599 per sq ft), held steady this quarter as Australia continued to record positive retail turnover figures.
The three major markets in Australia have developed into established global retail markets due to their educated customer bases. International retailers are attracted to the transparency and legislated structure of operation in Australia and greater competition has helped boost prime retail rents across Australia’s markets.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
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