New York City’s 5th Avenue has once again topped the list of most expensive retail rents in the world with an average of $3,500 per square foot annually, according to research by Cushman & Wakefield. Hong Kong’s Causeway Bay placed a distant second, with rents averaging $2,400 per square foot.
The research comes from “Main Streets Across the World,” a research report that Cushman & Wakefield releases annually. It tracks over 500 of the top retail streets in the world by prime rental value.
Across the U.S., retail rents increased 6.9 percent year-over-year. Seattle experienced the sharpest increase at 27 percent, though at $70 per square foot, is still the least expensive U.S. market tracked by the report.
Rodeo Drive in Los Angeles also saw a dramatic rent spike — 23 percent — which maintained the street’s second-place finish in the U.S. with rents of $800 per square foot.
Other U.S. markets singled out for strong growth were Chicago (Michigan Avenue), Miami (Palm Beach) and San Francisco (Union Square).
Chart of North American retail rents by street. Source: Cushman & Wakefield. Click for larger.
“In San Francisco, a combination of a bustling tourism market — the city is one of the top international destinations — and an improving local economy has led to strong luxury retail space demand,” according to the report. “As a result, vacancy rates at Union Square have eased to a record low of 1.1 percent. This helped to support rental growth of 13 percent over the 12 months to June 2015, following last year’s growth of 21 percent.”
The report predicts that 2016 will continue to see improvements “thanks in general to better domestic demand and corporate investment,” but notes that results will vary from country to country.
— Jeff Shaw