Pitt Street Mall ranks seventh most expensive retail street globally
Australia, through Sydney’s Pitt Street Mall, retained its position as the world’s 7th most expensive country in which to rent space on a retail shopping strip. Rents here costing on average US$1,000 per square foot, compared with the world’s most expensive location of Upper 5th Avenue in New York at US$3,000 per square foot.
Despite a 4.7 per cent fall in average rents to US$2,725 (HK$21,255) psf/yr, Hong Kong’s Causeway Bay retains its second place position, as rental correction in the district is almost complete towards the end of this year.
London’s New Bond Street leapt into third place in the global rankings in 2017 as rents increased by more than a third (in local currency) on the previous year to US$1,720 (HK$13,416) psf/yr. The increase relative to other global destinations underlines the strength of London’s premium retail offer and strong demand for prime retail space in the West End, which brought a resurgence in leasing deals at the beginning of 2017 despite having a pause in activity in the initial aftermath of the EU referendum last year.
Cushman & Wakefield’s 2017 Main Street Across the World research, which tracks 451 of the top retail streets around the globe and ranks the most expensive in 68 countries by prime rental value, revealed in the APAC region, Pitt Street Mall has ranked third, Melbourne’s Bourke Street fifth and Brisbane’s Queen Street Mall has risen from ninth to eighth most expensive streets in the past 12 months.
Activity in the Australian market has been limited by the low levels of availability but, with new developments and lease expiries on the horizon, there are an increasing number of opportunities for landlords to secure high quality tenants, Cushman & Wakefield added.
The research also revealed one of the most recent trends has been for domestic retailers to move to suburban shopping centre locations, which has freed up CBD space for major international operators. These more prominent CBD sites tend to command higher rents, which are more affordable to international retailers given their ability to generate higher turnovers.
“A recent example is ISPT’s GPO site on Melbourne’s Bourke Street which was consolidated into a single store occupied by H&M, having previously been occupied by a number of smaller stores,” Cushman & Wakefield noted.
“H&M, Zara, Uniqlo and more recently, Sephora, Pandora and Swarovski have all been busy securing sites over the past two to three years and more new entrants are expected.”
The study revealed retail sectors that continue to outperform are fast fashion, cosmetics and luxury, closely followed by athletic wear, with Under Armour, 2XU, Lorna Jane and JD Sports all trading well in the Australian market.
“With a maturing retail sector and a resurgence in inner city living, city centre streets and malls will continue to see strong retailer demand,” Cushman & Wakefield noted. “Extended trading hours will provide additional boost to the market, with shops in some cities now open from 7 a.m. to 7 p.m. and a further liberalisation possible in Melbourne and Sydney.”
The recently released study also mentioned the short and medium term outlook for Asia Pacific remains a bright one, with economic growth still buoyant across the region and expected to outperform the rest of the world in the coming years. As a result, demand from international retailers is continuing apace, attracted by an increasingly wealthy and sophisticated consumer base, along with a steadily improving retail infrastructure.
Food and beverage operators remain a key driver of demand, although health and beauty, fashion, sports and lifestyle brands have been equally prominent across much of the region. Technology is playing a major role, exemplified by Singapore’s drive towards becoming a smart nation, with retailers increasingly turning it to their advantage to attract customers and drive store sales.
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