Despite prime retail rents that have fallen in almost every region worldwide as the global recession impacts consumer sentiment and retail sales, New York City remains the world’s most expensive retail destination according to new research from CB Richard Ellis (CBG:NYSE), Global Retail MarketView.
Demand for retail space has declined in most markets across the world as consumers cut back on spending and unemployment continues to rise in many countries. Emerging and less established markets have been most significantly affected. Buenos Aires saw the largest annual decline in retail rents year-on-year with a drop of 37%, followed by Warsaw with a 33% decline and Washington DC with a 26% decline. While some markets have continued to experience year-on-year increases in retail rents, in many cases the current pressure is downward.
Prime retail rent represents a typical open-market headline rent that an international retail chain can expect to pay for a ground floor retail unit (either high street or shopping center depending on the market) of the highest quality space in the best location in a given market.
Despite a 10% rental decline year-over-year, New York remains the world’s most expensive retail destination, with rental values totaling $1,800 sq. ft. per annum. New York’s retail rents stand at nearly double those of Hong Kong, which still ranks in second place globally with rents of $975 sq. ft. per annum. Los Angeles and San Francisco rank at ninth and tenth positions within the global ranking.
“With unemployment rising and consumer confidence weak across most parts of the world, most property markets are experiencing reduced demand from retailers and an increase in the number of vacant units, which is in turn affecting rents,” said Anthony Buono, Executive Managing Director of CBRE Retail Services. “However, some retailers are taking advantage of the weakening market conditions to negotiate more favorable lease terms or jumping on rare opportunities to move into prime high street locations at competitive rates.”
Some cities have continued to experience year-on-year increases in retail rents. Lyon, France, tops the ranking of the fastest growing retail rental markets with a 39% rise year-on-year. San Francisco ranks fourth with an increase in retail rents of approximately 20%.
Read the full article over at Real Estate Channel.