NYC Still Reigns As Most Expensive Retail Rental Market
Despite the news of falling prime retail rents in almost every region worldwide, New York City remains the world’s most expensive retail destination, according to new research from CB Richard Ellis (CBRE), Global Retail MarketView.
Demand for retail space has declined in most markets across the world as consumers cut back on spending and unemployment continue to rise in many countries. Emerging and less established markets have been most significantly affected. Buenos Aires saw the largest annual decline in retail rents year-on-year, with a drop of 37 percent, followed by Warsaw with a 33 percent decline, and Washington, D.C. with a 26 percent decline. While some markets have continued to experience year-on-year increases in retail rents, in many cases the current pressure is downward.
Prime retail rent represents a typical open-market headline rent that an international retail chain can expect to pay for a ground floor retail unit (either high street or shopping center, depending on the market) of the highest qualify space in the best location in a given market.
Despite a 10 percent rental decline year-over-year, New York City remains the world’s most expensive retail destination, with rental values totaling $1,800 square feet per annum. New York’s retail rents stand at nearly double those of Hong Kong, which still ranks in second place globally with rents of $975 per square foot per annum. Los Angeles and San Francisco rank at ninth and tenth positions within the global ranking.
“With unemployment rising and consumer confidence weak across most parts of the world, most property markets are experiencing reduced demand from retailers and an increase in the number of vacant units, which is in turn affecting rents,” said Anthony Buono, executive managing director of CBRE Retail Services. “However, some retailers are taking advantage of the weakening market conditions to negotiate more favorable lease terms or jumping on rare opportunities to move into prime high street locations at competitive rates.”
In U.S. cities, vacancy rates for all property types continue to increase. The first signs of rental decreases have been seen across most key American cities in the first quarter of 2009.