Fifth Avenue Still World’s Priciest Retail Spot

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According to a just released CB Richard Ellis Global Retail Rents Survey, the Big Apple’s Fifth Avenue remains the world’s most expensive retail destination, with rents reaching $2,200 a square foot per year-that’s more than 75 percent higher than in Hong Kong, the second most expensive. The report also highlights the polarization between primary and secondary retail spots during the global economic downturn, as retail rents still grow in strategic destinations around the globe. Thus, retailers are focusing on some of the major global fashion capitals like Hong Kong, London, and LA, pushing rents in the world’s most expensive retail locations even higher. Some smaller and secondary retail cities continue to see strong levels of growth. And despite deteriorating economic conditions, the retail sector has to date continued to perform relatively well. Half of the markets surveyed saw retail rental growth in the past year (ending Q3 2008), with 65% of those seeing increases over the last six months. Joining New York in the top five most expensive retail destinations worldwide are Moscow, London and Tokyo. Demand is coming from retailers that are performing well in the current market-such as luxury brands-but also from retailers who are reining in wider expansion plans in response to weakening consumer spending, instead focusing on longer-term strategic locations, rather than new destinations. Although rents have risen in many key cities, the slowdown in consumer demand has inevitably struck some retail markets around the world, resulting in falling rents. In cities such as Tokyo and Madrid, where rents fell by 5% in the past six months, retailers are now beginning to take advantage of their core strength, with landlords becoming more open to rental negotiations. Despite growing downward pressure, retail rents in these cities remain some of the highest in the world (Tokyo 5th, Madrid 21st). “Growth rates are indeed slowing, but demand for top-end retail space-especially in markets like New York and Los Angeles, with prime fashion districts-is the key retail driver in many cities,” said Anthony Buono, Executive Managing Director of Retail Services, CB Richard Ellis. “Many retailers see prime space as the best long-term business opportunity in an uncertain market.

Via NY Observer

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