Los Angeles -- A report released Tuesday by CBRE Group found that Hong Kong and New York City rank number one and two as the world’s most expensive prime retail markets.
According to the company’s third quarter 2012 MarketView report, global retail prime rents remain high in key gateway markets due to strong flows of international tourists seeking luxury products. Hong Kong and New York City recorded significant rises in prime retail rents during the third quarter of 2012, while the next tier -- Tokyo, Sydney and London - held steady, according to the research.
U.S. gateway markets have benefited from strong tourism demand and have also recorded significant rises in prime rents. Gains were witnessed particularly in New York City, where rents on Fifth Avenue increased 17% quarter-over-quarter. International retailers are seeking flagship store space, where consumers and tourists spend liberally on luxury goods and services. As such, demand for scarce prime space remains high.
“We are continuing to see strong demand and price velocity on the very best retail corridors in gateway cities, particularly in Manhattan, where every brand must be located in order to legitimately claim a ‘global’ identity,” said Anthony Buono, executive managing director, Americas Retail Services, CBRE. “Fifth Avenue, Madison Avenue, Times Square and to an increasing extent, Soho and Meatpacking districts, are destinations for global shoppers. However, core rents are reaching new heights and retailers are compelled to reach new heights to acquire space.”
The global prime retail market proved resilient in third quarter 2012 with the CBRE Global Retail Rent Index increasing on a quarterly basis by 2.0% and by 7.3% year-over-year. Global retailer activity remains polarized with prime retail corridor space in the best markets experiencing the greatest retailer demand. International entertainment, restaurants and fast-fashion brands actively sought prime retail space as they pursue long-term expansion strategies, while still maintaining a cautious eye on global growth and softening retail indicators, found CBRE.
Hong Kong, which is firmly cemented at the top spot, has garnered increasing interest from fast-fashion retailers seeking expansion opportunities throughout its shopping malls.
“Hong Kong and other Asia Pacific markets have benefited from international retailers - particularly fast-fashion, cosmetics, jewelry watch, and mid-range fashion retailers -- aggressively seeking prime locations across the region,” said Ray Torto, global chief economist, CBRE.