New York overtakes Hong Kong as world’s most expensive shopping location

David Parsley

5th Avenue New York

New York’s Upper Fifth Avenue has overtaken Hong Kong’s Causeway Bay as the world’s most expensive shopping destination, according to Cushman & Wakefield.

The agency’s flagship retail research report Main Streets Across the World, published today at the MAPIC retail trade show in Cannes, France, showed prime retail rents across the globe rose by an average of 2.4% in the 12 months to September 2014, with recovery being sustained but at an overall slower rate.

The report ranks the most expensive locations in the top 330 shopping destinations across 65 countries.

It found volatile and somewhat subdued economic activity affected some markets, while structural changes impacting on others. However, despite a more constrained rental growth rate, 277 of the 330 locations surveyed were either static or increased over the year.

The ranking of the most expensive retail locations in each country recorded notable movements this year. Rents in New York’s Upper Fifth Avenue hit a record $3,500/sq ft per year as it leapfrogged Causeway Bay, which saw rents fall by 6.8%, to secure top spot.

John Strachan, global head of retail at Cushman & Wakefield, said: “New York is once again the most expensive shopping destination in the world and for the first time since 2011 - Upper Fifth Avenue also set a new record for the highest retail rents ever recorded. Global gateway markets continue to surge ahead as major brands battle for premier addresses in the top cities.”
Despite seeing no change to rental values after a 40% rise last year, Champs-Élysées in Paris retained its third place, which was followed by London’s New Bond Street in fourth where rents rose by 4.2%. Pitt Street Mall in Sydney completed the top five, with the location surging up three places as it recorded an increase of 25% on the back of a several international retailers taking up large units in the last six months.

The Americas yet again led the way as prime rental values surged ahead by 5.8%, an identical rate to that recorded in 2012/2013. The US and Mexico were the main catalysts behind this expansion, while Brazil acted as a drag on growth.

Matt Winn, Cushman & Wakefield’s global retail chief operating office and head of retail in the Americas, said: “Positive economic news, combined with healthy retailer fundamentals, continued to filter through into the US retail market. Prime rents over the year to September were up an impressive 10.6% on the same period last year. Indeed, strong retailer demand and robust tourist numbers continued to support expansions across the country, with gateway cities such a Los Angeles, San Francisco and New York in particular witnessing double-digit growth. The arrival of brands such as Microsoft, which recently announced its first flagship store in New York’s Upper Fifth Avenue, further underlined the importance of these premier shopping destinations.”

A slower expansion was also evident in Asia Pacific (3.6%) where the traditionally buoyant Hong Kong market was adversely affected by a decline in retail spending and lower tourism growth.

James Hawkey, head of retail in Asia Pacific at Cushman & Wakefield, said: “Although New York took first place this year, Hong Kong’s Causeway Bay remains the second most expensive retail location on earth. In 2014, retailers showed caution expanding in Hong Kong in the face of moderating sales performance and less exuberant consumption from mainland visitors. Luxury brands were conservative, while watch and jewellery retailers notably cut back on new stores, with this sector seeing negative growth. Several leading local retailers recorded lower holiday sales.

“The beginning of the ‘Occupy Central’ protest in Hong Kong since the end of September has further weakened the retail sentiment in major core retail areas, especially in Causeway Bay and Mong Kok where students are still blocking some major roads.”

The report found occupier conditions in the EMEA region were generally firmer and improved, evidenced by a stabilisation in markets previously witnessing marked declines in rents. However, EMEA growth (1.3%) was held back by significant falls in the Middle East. Indeed, prime rental growth in Europe (2.3%) was not too dissimilar to 2012/2013.

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