As the global economy continues to take tentative steps towards recovery, consumer driven industries worldwide are once more beginning to thrive. This has seen retail rents in prime locations climb steadily, with New York’s Fifth Avenue now regaining the title of the most expensive international shopping destination.
New York, and in particular Manhattan, has long been a popular destination for lovers of fashion, largely thanks to the area’s showcasing in films and television series such as Sex and the City. According to a new report by Cushman & Wakefield, which ranks global shopping destinations in terms of the amount retailers must pay to occupy a shop, prime retail rents on Upper Fifth Avenue now cost $3,500, or £2,238, per square foot having risen by 13.3 per cent in the past year.
Fifth Avenue has regained its title for the first time since 2011, as in the ensuing years the global financial crisis saw Causeway Bay in Hong Kong take the top spot. However, in this year’s report the Asian destination fell to second place with rents of $2,735 per square foot, while Paris’ Champs Elysees retained its third place at $1,556 per square foot.
Cushman & Wakefield believe that ongoing situations in Hong Kong, such as the “Occupy Central” protest and the cooling of the Chinese marketplace overall, may have allowed New York to edge back in to first place. This year, retail rents in Hong Kong have fallen by 6.8 per cent, making it the only city in the top five to experience a contraction in retail property.
However, head of retail in the Americas for Cushman & Wakefield, Matt Winn, believes a stronger economic environment in the USA at present is the largest contributory factor.
He says; “Positive economic news, combined with healthy retailer fundamentals, continued to filter through into the US retail market.
“The arrival of brands such as Microsoft, which recently agreed to open its first flagship store in New York’s Upper Fifth Avenue, further underlined the importance of these premier shopping destinations.”
The results of the survey may raise eyebrows in the world of high fashion as, at present, London is the global city with the highest number of designer stores – surely, then, it should be the most expensive for retail rents? Yet it is only in fourth place, with New Bond Street costing 4.2 per cent more this year at $1,216 per square foot.
However, London’s slightly lower rents may in fact be good news for the city as it allows retailers still keen to lift capital by cutting costs access to a wide consumer pool. Furthermore, the influx of high fashion retailers to the UK capital are proving immensely popular with international consumers as “retail tourism” has become a major source of revenue for the local economy, with the city recording high levels of visitor numbers from China, the Far East and Europe.
Do you think that high retail rents can have a negative impact upon a major shopping destination, or do the high costs add an element of prestige to locations such as Manhattan and Hong Kong?
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