More than half of the world's most prestigious shopping streets have been affected by the global economic downturn with 54% of the 274 streets monitored by real estate adviser Cushman & Wakefield, seeing their prime rents fall. The findings in the annual Main Streets Across the World report are the biggest global fall in retail rents in its 24 year history. In only 18% of locations did prime rents rise.
Most of the ten most expensive streets in the world have seen their prime rents fall or remain static as retailers have reined in expansion, the report says. New York's Fifth Avenue remains the world's most expensive street where retailers can expect to pay €13,027 a sq m per annum, a decline of 8.1% on 2008.
Out of the monitored 274 streets Váci street in Budapest, Hungary, fell back to the 34th place compared to last years 30th place. In Hungary's prominent shopping street retailers are expected to pay €1,200 square meter per annum.
Viktória Szabó, partner, head of retail at Cushman & Wakefield's Budapest office added: “The global retail property market now appears to be slightly more stable and a modest pick-up in activity may soon be evident. Whilst the availability of units in prime locations is tight and demand from occupiers is showing signs of slow improvement for these locations, secondary streets are expected to see a further downward adjustment in rents, as retailers focus increasingly on AAA locations and continue to scale down their presence in less profitable areas. It is also expected that occupier demand will continue to be selective and a significant resumption of rental growth in the short term is unlikely, at least until the wider global economy and labor market show firmer signs of recovery.”
Fifth Avenue has been the world's most expensive street for the last eight years. Hong Kong's Causeway Bay and Paris's Avenue des Champs-Élysées maintain their positions at second and third respectively.
Germany's Kaufingerstrasse in Munich was the biggest riser into the top ten moving to ninth from 12th with a 7.1% increase in rents. Ireland's Grafton Street in Dublin was the biggest faller in the top ten moving from fifth to eighth with prime rents falling 22.5%. Last year it entered the top five for the first time.
Globally, the biggest increase in rents was in Sao Paulo, Brazil, with rents at Alameda Lorena and Iguatemi Shopping rising 111% and 79.3% respectively. In Asia Pacific, Ho Chi Minh City's CBD, Vietnam had the biggest increase at 50% whilst in Europe, Rue St Catherine in Bordeaux, France had the biggest increase at 17.6%.
Globally, the biggest fall in rents was in Mumbai with Colaba Causeway falling 63.5%. In the Americas, Rio de Janeiro's Sao Conrado Fashion Mall fell 53.4% whilst in Europe, Bucharest's Calea Victoriei fell 48.1%.
John Strachan, global head of retail, Cushman & Wakefield, said: “The last 12 months have been one of the most difficult periods ever for the retail sector with consumer spending and retail sales down in many markets. In the previous 12 month period global retail markets appeared to be fairly resilient but more recently the impact has been much more significant as the full impact of the downturn has been realized. The good news, however, is that the worst is almost certainly now behind us. Economic recovery in many major markets is now underway with key driver economies such as Germany now officially out of recession. There will undoubtedly be some markets which will continue to be affected over the next year but we expect to see a greater number move back into positive territory.” (press release)