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CBRE Releases Global Retail Report, New York City Still Most Expensive Market

CBRE Releases Global Retail Report, New York City Still Most Expensive Market


(News Source:CB Richard Ellis)

(LOS ANGELES, CA) -- Despite prime retail rents that have fallen in almost every region worldwide as the global recession impacts consumer sentiment and retail sales, New York City remains the world's most expensive retail destination according to new research from CB Richard Ellis (CBG:NYSE), Global Retail MarketView.
 
Demand for retail space has declined in most markets across the world as consumers cut back on spending and unemployment continues 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%, followed by Warsaw with a 33% decline and Washington DC with a 26% 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 quality space in the best location in a given market.
 
Despite a 10% rental decline year-over-year, New York remains the world's most expensive retail destination, with rental values totaling $1,800 sq. ft. 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 sq. ft. 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."
 
Some cities have continued to experience year-on-year increases in retail rents. Lyon, France, tops the ranking of the fastest growing retail rental markets with a 39% rise year-on-year. San Francisco ranks fourth with an increase in retail rents of approximately 20%. 
 
The Americas

pr220-chart-2.jpg U.S. cities continue to be the most expensive retail locations in the Americas.  Los Angeles and San Francisco rank at ninth and tenth positions within the global ranking, following New York which is the most expensive destination in the world.

Yet with vacancy rates for all property types continuing to increase in the U.S., the first signs of rental decreases have been seen across most key American cities in the first quarter of 2009. Retail spending has been fluctuating in Latin American countries, and retail rents in the region have been affected to varying degrees, with Mexico City and Buenos Aires seeing retail rents decline by 14% and 37% respectively year-on-year.
 
Europe, Middle East & Africa

Moscow, Paris and London (respectively) top the retail rents ranking in the EMEA region, with Moscow now the third most expensive market in the world. The threat of weaker demand and rising vacancies caused the EU-27 Retail Rent Index decrease by 3% during the first quarter of 2009, a decline of 1.2% year-on-year. The rate of European rental growth has been steadily declining since peaking at around 5% quarter-on-quarter in mid-2007. Prime retail rents dropped by 10% or more quarter-on-quarter in several markets including Dubai, Barcelona, Athens and Dublin. Retailer demand is down in most EMEA markets but there are some bright spots, as many discount and food retailers have announced major expansion plans.

In some markets, retailers are also known to be negotiating with landlords to secure rent discounts or more favorable lease terms in exchange lease extensions.
 
Asia Pacific

Leasing activity in major Asian retail centers remained mostly weak in the first quarter of 2009 as retail brands continued to delay expansion plans or closed down underperforming outlets. Hong Kong ranks as the world's second most expensive retail rental market, with values of $975 sq. ft. per annum. Further declines in prime retail rents have been recorded in Beijing, Tokyo, New Delhi and Singapore. Guangzhou was the third fastest growing market for retail rents year-on-year, but has seen rents decline slightly in the past six months. In the Pacific, the most expensive retail location is Sydney, Australia, with rents of $624 sq. ft. per annum. 

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