For the first time in five years, Hong Kong’s Causeway Bay has replaced New York’s Upper 5th Avenue as the world’s most expensive retail street by rental value, according to Cushman & Wakefield.
The annual Main Streets Across the World report, released yesterday at MAPIC, showed a significant decline in New York rents, with Upper 5th Avenue slipping back to second place globally, with average annual rents at $2,250/sq ft compared with $3,000 in the previous 12-month period.
Despite a small decline in average rents, Hong Kong’s Causeway Bay area took top spot, with an annual figure of $2,671/sq ft. London’s New Bond Street meanwhile is the most expensive European location, in third place globally, with rents broadly flat year-on-year at $1,744, underlining the fact that luxury and high-end retailers still see the UK’s capital as a key retail destination, said the advisor.
Elsewhere in the top 10, the Avenue des Champs Elysees is in fourth place ($1,519), with Milan’s Via Montenapoleone in fifth position ($1,466). In sixth place is Tokyo’s Ginza, which is the highest-ranked Asian street after Hong Kong, with rents on average costing ($1,219).
Report author Darren Yates, head of EMEA retail research at Cushman & Wakefield, said: “There is still a significant appetite for premium retail sites globally, with the top retailers using stores as part of their customer experience strategy. While technology is still a major disruptor in retailing, it is also enabling physical retail to fight back as it allows retailers to better understand their customers and to enhance the in-store experience.”
Across Europe, Kaunas in Lithuania provided the most affordable street at $19/sq ft per annum. The strongest growth year-on-year was seen in Porto's Baixa (Rua de Santa Catarina), with a rise of 30.4% to $98/sq ft annually. The biggest rental decline was in Istanbul’s Bagdat Caddesi at -24% to end at $178/sq ft per year.
Separately, E-commerce spending could hit maturity by 2025 and no European market will top the market share achieved in the UK of about 2%, forecast Colliers International in a report released at MAPIC on Wednesday.
“At the moment, there is a fear of unlimited online growth,” said Paul Souber, co-head of EMEA retail. But recent developments like Amazon buying Whole Foods, Microsoft opening a 20,000 flagship store on Oxford Street and even a Google pop-up on Regents Street showed bricks-and-mortar retail had a place alongside e-retail, said Souber, particularly as retailers addressed logistics challenges like the costs of online returns.
A YouGov study also showed the majority of Millennials preferred physical shopping to online purchases.
“To be a retailer you have to offer a seamless omnichannel experience,” he said.
The agency is seeing resurging interest in France, Spain and Germany. UK brands are also exploring Dublin as a way of stepping into euro-zone companies via an English-speaking country and many are very keen on the Netherlands.
Despite the uncertainties of Brexit, the UK continues to receive international demand, driven by its retail spend - about five times that of other European countries – and the brand value of London.
“If it may be rebased and repriced, there could be good value,” said Souber.
