By Barbra Murray
Hong Kong’s Causeway Bay has knocked Upper Fifth Avenue out of the lead position as the most expensive retail street in the world, according to Cushman & Wakefield’s Main Streets Across The World 2018 report.
With the 2018 version of Main Streets, Cushman & Wakefield marks its 30th year of sharing its observations of the leading retail stretches around the globe, ranking them by rental value. One thing hasn’t changed: streets in either Hong Kong or New York have topped the list since the beginning. For this latest report, the commercial real estate services firm surveyed 446 streets.
“There is still a significant appetite for premium retail sites globally, with the top retailers using stores as part of their customer experience strategy,” Darren Yates, report author & head of EMEA retail research at Cushman & Wakefield, said in a prepared statement.
This year, there’s been a switch at the top for the first time since 2013. Fifth Avenue saw its second-quarter year-over-year rental rates decrease drastically, going from $3,000 to $2,250 per square foot. And while Causeway Bay recorded a decline as well—from $2,725 to $2,671 per square foot—the drop wasn’t enough to keep it from taking the highest spot. A rebound in the retail market, largely spurred by the return of mainland Chinese tourists, played a significant role in Causeway Bay’s success.
Trailing Causeway Bay and Fifth Avenue, London’s New Bond Street, where rents rose to $1,744 per square foot, held onto third place, while Avenue des Champs Elysees in Paris and Milan’s Via Montenapoleone switched positions, taking fourth and fifth place, respectively.
Looking at the top 30 streets, retailers seeking to set up shop on a high-profile avenue at a low-end price would obtain the least expensive accommodations on Istiklal Street in Istanbul and Best Achieved Shopping Mall in Ho Chi Minh City, Vietnam, which share last place on the list with rental rates of $190 per square foot. The lowest rents of the 446 streets are in the $20 to $30 per square-foot range and can be found in emerging markets in Africa and Latin America.
Rental rate disparities aside, most of the top retail streets share certain common themes, namely, the spread of online, omnichannel retailing as standard and its impact on store design. “While technology is still a major disruptor in retailing, it is also enabling physical retail to fight back as it allows retailers to better understand their customers and to enhance the in-store experience,” Yates said.
If numbers are any indication, Fifth Avenue will be at the head of the class again soon. One of the best-known strips of high-end retail in the world, Fifth Avenue has held the distinction of being the highest-priced retail street 14 times over the last three decades, the most of any of the other surveyed destinations, including Causeway Bay, which has appeared in the number one spot on six occasions.
Although the top handful of the priciest streets is likely to remain the same for some time, the tenant profile is in for a change.
“There is still a healthy future for the sector, but we are moving to a ‘beyond retail’ phase driven by societal and technological change, meaning business models will also need to adapt,” Justin Taylor, head of EMEA retail at Cushman & Wakefield, said in prepared remarks. Along main streets, even the most expensive, shops will decrease in presence as such users as restaurants and services increase in tenancy. “As a result, traditional retail is therefore being resized, reinvented and reimagined,” he added. “Equally, however, the disruption is also creating opportunities for exciting new operators and formats to emerge.”
Image courtesy of Hang Lung Properties