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Prime retail streets prove resilient to global economic downturn
19 Nov, 2008, Amsterdam
The world’s main shopping streets are proving largely resilient to the global economic downturn with retail rental levels rising or at least remaining stable in 94 per cent of 236 streets monitored. The findings are in real estate adviser Cushman & Wakefield’s 23rd annual Main Streets Across the World report which provides a global barometer of the strength and popularity of shopping streets in 48 countries.
New York’s Fifth Avenue is once again the world’s most expensive shopping street where retailers can now expect to pay rents of €12,612 per square metre of sales space per annum, an increase of 23 per cent on 2007. The most expensive streets in Hong Kong, Paris, Milan and Dublin make up the rest of the top five but London and Tokyo have dropped down to six and seven respectively. Dublin has been the best performer in the top ten with the city’s Grafton Street rising two places in the ranking to enter the world’s top five most expensive streets for the first time. Retailers entering the street can now expect to pay $824 sq ft/€5,621 sq m per annum, a rise of 5.3 per cent on 2007.
John Strachan, global head of retail, Cushman & Wakefield said: “Demand for often scarce prime retail space on the world’s main streets is being driven by a number of factors. For luxury and high end retailers, a presence on the most prestigious streets is deemed essential for brand positioning, sometimes regardless of how profitable a store might be. Such brand profile helps to drive revenue through other channels such as the internet, and sales of product lines such as perfumes and accessories which are sold more widely.”
End to explosive rental growth in the Netherlands
Retailers continue to expand
Strong rental growth in Turkey
Gulsin Hakman, head of retail, Cushman & Wakefield Turkey said: “In 2008 cities with high consumer potential have grown faster than ever before. Both domestic and overseas retailers have been looking to increase their market share and consolidate their market position. Many have therefore been opening new stores on both the country's main shopping streets and in the increasing number of new shopping centres (with many of the new developments now in the smaller Anatolian cities.) This has led to higher rents which, together with the increased cost of distribution and staff salaries, has put into question the sustainability of some retailers' expansion plans."
He continues: “Going forward, consumer spending is expected to slow in many markets through 2009 as the impact of the global liquidity crisis is felt on main street. The US and European markets such as the UK, Spain, Germany, Italy and Ireland face recession although some Central European markets look set to perform relatively well. Cross-border retailers will continue to look for ways to capitalize on the emerging markets over the long term, but are expected to proceed more cautiously than before in the near term hence retailers are expected to become more sensitive to occupancy costs.”
The world’s ten most expensive shopping streets 2008
Source: Cushman & Wakefield (full ranking contained in the report)