Retail rents stabilize as recovery takes hold, brokerage reports
Rents for stores in the world’s top shopping districts such as Fifth Avenue and Rodeo Drive have stabilized, with some markets even seeing rising rents as the economic recovery gathers momentum, a real estate brokerage said Wednesday.
The most expensive retail rents in the world are in New York, where merchants expect to pay $1,800 per square foot per year to lease a store in a choice location, according to the quarterly report by CB Richard Ellis. Sydney, Australia, and Hong Kong ranked second and third, respectively.
The strongest growth is in emerging economies led by China, India and Brazil. In China, “consumers appear to be spending their new-found wealth at record levels,” the report said.
Overall, vacancy has stopped rising and rents have leveled off. In the U.S., growth in consumer spending in general has stabilized over the last few months and consumers are increasing what they spend on necessities. That prompted some tempered optimism from the report’s authors.
“Given that we are currently comparing to some of the lowest points in retail sales history on a year-over-year basis, we remain cautious about seeing a solid consumer recovery,” the writers said. “A steady recovery is not expected until the beginning of 2011, but the fact that retail center availability rates have not increased in the third quarter is a good sign.”
-- Roger Vincent
Photo: At the epicenter of Beverly Hills' high-rent district. Credit: Los Angeles Times