Hong Kong’s Causeway Bay has retained its crown as the world’s most expensive shopping street, followed by New York’s Upper 5th Avenue and London’s New Bond Street, according to new data from Cushman & Wakefield.
The annual ‘Main Streets Across the World’ report tracks rents for 448 locations across 68 markets – the largest number ever included since it started in 1988.
The report ranks locations by their prime rental value using Cushman & Wakefield’s proprietary data.
Last year Causeway Bay ended five years of domination by New York’s Upper 5th Avenue, and in the 2019 rankings, it retains its position. Upper 5th Avenue is in second place, with London’s New Bond Street third in the global list.
Report author Darren Yates, head of EMEA retail research at Cushman & Wakefield, said: “In terms of rental performance, this year’s results are encouraging and demonstrate the resilience of the premier retail locations. Rents on the world’s top retail streets have been fairly stable and there is greater clarity on where retail is heading.
“However, there is downward pressure on rents in many weaker locations, particularly in the more mature markets of Europe and North America. In Asia Pacific, retail has generally performed well across a very diverse group of markets.”
Yates further expanded on the relationship between online and in-store retail experiences: “Online sales continue to increase around the world, but while much of the narrative is focused on the challenges the internet poses for traditional bricks and mortar, the relationship between the two is more complex.
“While quantifying the value of the store has become more difficult, it remains an important touchpoint for the consumer and generates both in-store and online sales by acting as a showroom and creating a wider brand presence — the so-called ‘halo effect’. The most successful retailers will be those who best integrate their physical and online operations to create a seamless, positive brand experience for shoppers.”
Top 20 Most Expensive Shopping Streets in the World
The macro – economic backdrop has affected the retail environment, with households under pressure from rising living costs and falling disposable incomes. Political uncertainty before the 2019 elections was also unhelpful, with domestic operators reducing their footprint while international tenants were cautious about market entry, Cushman & Wakefield said of South Africa.
In addition, proptech innovations along with changing business models have led to reduced retailer take-up, it said.
“Rental levels have therefore been under pressure over the last 12 months and a growing number of tenants have been requesting reductions, freezes and lower uplifts.
“In some cases, shorter lease terms are evident, while many tenants have signed deals with lower rents and higher landlord fit – out contributions.”
Cushman & Wakefield said that many retailers are also focused on closing non-profitable stores, with some large space users reducing floor space requirements to reduce occupational costs and boost store profitability.
As a result, availability has risen and landlords are having to come up with innovative ideas to fill vacant units and drive footfall.
Across the different categories, the grocery/supermarket sector has performed well, as has the luxury sector, pharmacy and personal care, Cushman & Wakefield‘s report said.
The F&B market remains active, with fast food generally outperforming restaurants, although consumers have reined back on eating out. The homewares and furniture markets remain under pressure.
Online sales are growing, but the South African consumer still enjoys in-store shopping –with ‘shoppertainment’ expected to remain a vital part of shopping centres for the foreseeable future, the report said.