The annual ‘Main Streets Across the World’ report tracks rents for 448 locations across 68 markets – the largest number ever included since it started in 1988. The report ranks locations by their prime rental value using Cushman & Wakefield’s proprietary data.
Last year Causeway Bay ended five years of domination by New York’s Upper 5th Avenue and in the 2019 rankings, it retains its position with rents to locate a store amounting to EUR 25,965 per sqm/yr. Upper 5th Avenue is in second place at EUR 21,295 per sqm/yr, with London’s New Bond Street third in the global list, with annual rents at the London thoroughfare having risen 2.3 percent in the past 12 months to EUR 16,222 per sqm/yr.
The Avenue des Champs Elysées in Paris (EUR 13,992 per sqm/yr) and Milan’s Via Montenapoleone (EUR 13,700 per sqm/yr) complete the top five. The biggest rental rise in the top 10 saw Sydney’s Pitt Street Mall increase rents by a colossal 17.9 percent over the past 12 months to reach EUR 10,185 per sqm/yr. Five of the top 10 global streets were in Europe, with four in Asia and just one in the US.
Report author Darren Yates, Head of EMEA Retail Research at Cushman & Wakefield, said: “In terms of rental performance, this year’s results are encouraging and demonstrate the resilience of the premier retail locations. Rents on the world’s top retail streets have been fairly stable and there is greater clarity on where retail is heading. However, there is downward pressure on rents in many weaker locations, particularly in the more mature markets of Europe and North America. In Asia Pacific, retail has generally performed well across a very diverse group of markets. Online sales continue to increase around the world, but while much of the narrative is focused on the challenges the internet poses for traditional bricks and mortar, the relationship between the two is more complex. While quantifying the value of the store has become more difficult, it remains an important touchpoint for the consumer and generates both in-store and online sales by acting as a showroom and creating a wider brand presence – the so-called ‘halo effect’. The most successful retailers will be those who best integrate their physical and online operations to create a seamless, positive brand experience for shoppers.”
From a European perspective, New Bond Street leads the way ahead of Paris and Milan, with Zurich’s Bahnhofstrasse at EUR 8,195 per sqm/yr and Vienna’s Kohlmarkt at EUR 4,860 per sqm/yr completing the top five. Dublin’s Grafton Street comes in at number 7 of the top 10 European streets at EUR 3,794 per sqm/yr. Among the top 10, Ermou in Athens saw the biggest rental rise of 14 percent to reach EUR 3,420 per sqm/yr. Overall, rents in around 70 percent of locations in Europe were stable or up on last year. Polarisation is evident, however, between the more established markets of North Western Europe and Southern, Central and Eastern Europe, where modern supply is lower and online sales have yet to really accelerate.
Boris van Haare Heijmeijer, Head of EMEA Retail at Cushman & Wakefield, said: “Even at the top end of the luxury market, retailers are having to work harder than ever to increase or maintain customer footfall. This means diversifying their offer away from just pure sales or transactions. Customers want a destination or attraction as part of their brand experience and that means adding other services or partners such as food and drink or leisure activities. We expect this type of brand extension to continue as retailers seek to maintain the attention of their customers and to stay relevant.”
The Asia Pacific region is in a relatively strong position, with rents in over 80 percent of locations covered either rising or stable. India recorded a particularly strong performance, with solid rental growth across several cities, while retail rents in Hong Kong have been resilient in the face of the recent protests – although the outlook is more uncertain.
In the Americas rental trends have shown a wide degree of variation. Rents in Canada and the US remain under pressure in many areas, although there can be significant variations between individual streets. There is some good news in that rents in New York streets appear to be stabilising, following falls in recent years. Latin American retail markets continue to mature, although rents can be volatile.
Lucyna Śliż, Associate, Business Development Director, Retail Agency, Cushman & Wakefield, said: “The Warsaw retail market is experiencing rapid growth, with ongoing changes resulting in significant improvements to the quality of public spaces. Each district of the capital is seeing new developments addressed to local communities and offering first-rate leisure options. Local residents are increasingly attracted to ground-floor restaurants and bars in residential buildings and stores located close to where they live. Consumer needs are driving, albeit still on a small scale, the emergence of local shopping streets as retail and service destinations.”
Małgorzata Dziubińska, Associate Director, Consulting and Research, Cushman & Wakefield, added: “Mixed-use projects integrating work, life, retail and leisure, and incorporating green areas are stimulating the development of retail streets and adding diversity to urban spaces. Such schemes provide an alternative to out of town retail and, whilst acting like magnets, boost the appeal of downtown locations and stimulate their revival.”
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