Edinburgh: The global recession is taking its toll on even the priciest shopping streets, where rents have plunged the most in at least 24 years, according to Cushman and Wakefield Inc., the largest closely held real estate broker.
Manhattan’s Fifth Avenue ranked as the world’s most expensive retail address for the eighth straight year, even as annual rents dropped 8.1% in the 12 months through June, to $1,700 (Rs81,940) a sq. ft, the New York-based company said in a report on Tuesday. Rents in Hong Kong’s Causeway Bay declined 15% to $1,525. On the Avenue des Champs-Elysees in Paris, they were little changed at $1,009.
Mumbai had the steepest decline worldwide, at 64%, the broker said.
The last 12 months have been one of the most difficult periods ever for the retail sector, John Strachan, global head of retail at Cushman and Wakefield, said in an emailed statement. The impact has been much more significant as the full impact of the downturn has been realized.
Shop rents are falling worldwide as household and consumer spending contract and unemployment rates rise, prompting retailers to curb expansion plans. Financial companies have fired 286,400 workers in the past year, according to data compiled by Bloomberg.
The average rent in the 274 shopping streets monitored across 60 countries by Cushman and Wakefield fell 23% to $213 a sq. ft from $276 a sq. ft a year earlier.
Rents declined in 147 locations, the most since Cushman and Wakefield first published its survey in 1986. They were little changed on 76 streets and rose on 51.
The biggest regional decrease was in the Asia-Pacific, with rents down 15.1%. In central and eastern Europe, they slid 14.7%. They dropped 12% in the US and Canada and 5.8% in Europe as a whole.
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, Anthea To, a Cushman and Wakefield retail analyst, said in the statement.
Rents in less profitable areas may continue to fall as retailers focus on the places that are most in demand, she said.
Milan’s Via Montenapoleone, where annual rents rose 1.5%, ranked as the fourth priciest street in the survey, at $887 a sq. ft. It was followed by Tokyo at $776 and London’s New Bond Street at $768. The most expensive streets in Zurich, Dublin, Munich and Sydney rounded out the global top 10.
Munich’s Kaufingerstrasse jumped to ninth place from 12th after annual rents rose 7.1% to $470 a sq. ft, the biggest increase of any street in the top 10 cities.
Munich’s affluent consumers and the region’s continuing prosperity make its prime pitches a No. 1 target for international brands seeking to expand into the German market, Inga Schwarz, Cushman and Wakefield’s head of research in Germany, said in the statement. Rents on Dublin’s Grafton Street tumbled 23%, the most of any of the 10 costliest addresses.
They surged as much as 111% in Sao Paolo. Ho Chi Minh City in Vietnam recorded the biggest jump in the Asia- Pacific region, at 50%.
Other shopping districts in the survey included New York’s Madison Avenue, Rodeo Drive in Los Angeles, Moscow’s Tverskaya, Shanghai’s East Nanjing Road and Vienna’s Kaertnerstrasse.
Cushman and Wakefield’s list of the 10 most expensive addresses is based on a ranking of countries by their priciest street. A country can’t have more than one street in the top 10.