Retail rents in the world’s best markets rise in the first quarter
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Rents in the world’s leading shopping districts stabilized in the first quarter and even rose in several major cities, commercial real estate brokerage CB Richard Ellis said Friday in a report.
Improvements in the global economy have lifted consumer and retailer confidence, prompting landlords to demand higher rents because vacancy is low in the best shopping centers and districts. The recovery has not translated to substantial retail sales growth, however.
New York kept its title as the most expensive place in the world to lease a store. Rents in the Big Apple average $1,725 per square foot per year, which puts it ahead of Sydney ($1,155) and Hong Kong ($974). Rents in London rose 20% from a year ago to $861 and Paris came in fifth at $791.
The other two U.S. cities in the world’s top 20 most expensive were greater Los Angeles in 12th place at $500 per square foot per year and Chicago in 14th place at $480.
Rents in Athens fell 12.3% and rents in Abu Dhabi fell almost 25%.
Retailers still face uncertain market conditions and continue to pressure on landlords to offer incentives such as free rent, said Raymond Torto, chief economist at CB Richard Ellis.
“However, market pressures have not stopped retailers from expanding and demand for prime retail space remains strong in many markets across the world,” Torto said. “This, combined with low vacancy rates, has created supply-demand imbalances in some markets.”
The disparity between choice shopping areas and secondary ones is growing, he said.
“Whilst prime space is doing well, secondary units are typically seeing higher vacancy, lower retailer demand and falling rents,” Torto said.
-- Roger Vincent
