New York City second to Hong Kong in world’s highest retail rents
Los Angeles -- CBRE Group released research findings on Tuesday that showed Hong Kong continued to keep its top spot as the world's most expensive global retail market, recording prime rents nearly 150% higher than New York City.
London ranked third, with prime rental rates 400% lower than Hong Kong’s.
CBRE’s quarterly survey, which tracks the top 10 most expensive prime global retail markets, revealed that strong demand from international retailers, coupled with a modest supply pipeline, has lead to record-high prime rental rates. Leading the pack, Hong Kong continues to rank in a rental class distinctly above its global peers, recording prime rental rates during first quarter 2013 of $4,328 per square foot per annum.
While markets such as Hong Kong, New York City, London and Paris did not record increases in prime rents this quarter, these cities have exhibited resilience due to international retailers continued longer-term strategic expansion strategies which feature a distinct preference for prime space in the best locations in these markets.
Ranking as the second most expensive global retail market, New York City ($2,970 per square foot) welcomed several new national and global retailers in 2012 that were attracted by the market’s strong international tourism features. The pipeline for new retail space in New York City is low. However, a significant amount of prime space is available along Fifth Avenue between 49th and 59th Streets.
Europe’s prime retail markets of London ($1,053 per square foot) and Paris ($1,050 per square foot) are holding steady, according to CBRE, largely due to scarcity of supply and correspondingly high rent levels.
The tight supply of prime space throughout the Asia Pacific region helped maintain rent levels in Sydney, Melbourne, Beijing and Tokyo. In Sydney ($1,018 per sq. ft), demand from international retailers (especially from the U.S.) is high with many new brands set to enter the market in 2013, according to the research.
Pacific markets gained prominence in the global retail rankings with Brisbane ($739 per square foot) and Melbourne ($851 per square foot) now ranking among the most expensive prime retail markets.
“Prime retail rents across the most expensive global markets have held firm against a backdrop of scarce supply and preference for prime space,” said Raymond Torto, CBRE’s global chief economist. “Despite subdued retail sales growth and strained consumer sentiments, international retailers remain focused on long-term growth strategies that have resulted in store expansions across many key global markets such as New York City, London and Moscow.”