Global Retail Rents Fuelled by High-end Brands
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 fuelled 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. For Asia, Hong Kong, Tokyo and Beijing feature in the global top ten.
“Asia’s retail centers continued to grow and rents continued to increase, with gateway cities like Hong Kong, Tokyo and Singapore attracting retailers new to the region, and retailers established in these centers beginning to spread into emerging markets. This is helping to increase competition for space particularly in prime areas,” said Sebastian Skiff, Executive Director, CBRE Retail.
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 (US$3,300 per sq. ft. per annum), Paris (US$1,452 per sq. ft. per annum) and London (US$1,356 per sq. ft. per annum). Hong Kong has held this position for the past two years.
Beijing entered the top 10 with the rent of US$681 per sq. ft. per annum.
“Russell Street in Causeway Bay, Hong Kong remains the most expensive place in the world for retail rents off the back of its very limited supply, low vacancy and availability, and the ongoing demand for retail space due to the influx of shoppers from mainland China,” said Mr. Skiff.
“Whilst generally speaking we still see strong demand for prime streets across Hong Kong, we are seeing rental growth levelling off, and flat to negative in secondary streets, with vacancies rising. There is likely to be an increase in new supply for the first time in many months but not all of this new stock will be suitable for the requirements of international brands and retailers. In fact, less than half of the new supply will be located in major retail districts, and the majority will be located on secondary streets that are less appealing to niche brands,” Mr. Skiff added.
“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 is strong and the leading locations are even becoming stronger. New York, Paris and London have seen prime retail rents rise 11, 28 and 18 percent respectively year-over-year from levels that are already in the stratosphere,” said Raymond G. Torto, Global Chairman of Research, at CBRE.
For the three Asian centers that featured in the top ten globally, research showed that retailer demand in Hong Kong is focused on prime locations rather than secondary streets. The most sought-after prime streets are Russell Street in Causeway Bay, Canton Road in Tsim Sha Tsui, and Queen’s Road Central in Central. These locations—which all recorded very tight vacancy—continue to attract both global and local retailers.
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.
