The Trends: Retail Markets Form Barbell
- Dec 09, 2008
New York City remains the world’s priciest retail destination as rental rates hit $2,200 per square foot per year, according to CB Richard Ellis Inc.’s latest “Global Retail Rents Survey.” Hong Kong bumped its ranking from third in the first quarter to second, but its $1,236 rental rate still falls significantly behind New York’s. Moscow fell from second to third with $1,047. London, up from sixth to fourth with $824, and Tokyo, down from fourth to fifth with $829, round out the top five.Other expensive North American cities are Los Angeles (No. 10), Chicago (No. 12), San Francisco (No. 19), Toronto (No. 36) and Vancouver (No. 50). The ranking features 33 Europe, Middle East and Africa markets and 11 Asia-Pacific cities.Decelerated consumer demand has led to lower rents in other major cities. Rents in Tokyo and Madrid (slotted 21st at $392), dropped 5 percent in the past six months, though the cities still rank among the world’s most expensive retail markets.CB Richard Ellis contends that retailers that are performing well, such as luxury brands, and retailers that are tempering wider expansion plans and concentrating on longer-term strategic destinations are driving demand. “It is easy to assume that falling consumer confidence and financial market turmoil across the globe are striking all retail stores, but the CBRE survey, together with sale figures from retailers, is showing that we have a barbell market,” noted chief global economist Raymond Torto in a statement. “Our analysis indicates that the upper end is holding up well and the same is true for lower-end, non-discretionary retailers.”Markets in the Europe Middle East and Africa region are among the world’s fastest-growing cities, led by Tel Aviv; Oporto, Portugal; Abu Dhabi; Valencia, Spain; and Lyon, France. Valencia; Lyon; Guangzhou, Shanghai and Hong Kong in China; New York City; Amsterdam; London; Berlin; Oslo, Norway; Prague in the Czech Republic;, Athens; Singapore; Los Angeles; and Utrecht in the Netherlands each secured slots on CB Richard Ellis’ top 50 list of the most expensive global retail destinations and on the firm’s top 25 list of fastest-growing destinations for retail rents.