While New York, Sydney, Hong Kong and London are leading the worldwide retail rent revitalization, emerging markets are more than holding their own in places like Sao Paolo and Rio de Janeiro. Despite a trend toward stabilization and growth, the global retail market remains divided, most markedly in vacancy rates between top-tier locations and the rest. See the following article from Property Wire for more on this.
Prime rents in the world’s leading retail real estate destinations have stabilized across the globe, with some markets now witnessing rental growth as the economic recovery gathers momentum and consumer confidence starts to improve, according to a new report.
The latest Global Retail Market View from CB Richard Ellis shows that demand for prime retail space in most markets remains strong, with some cities seeing substantial annual growth at the end of the third quarter of 2010.
Prime retail rents globally increased by 0.2% from the second quarter to the third quarter of 2010. Rents on a year on year basis grew in three of the major global regions, with the Americas seeing the highest rental increase at 6%, Asia at 4% increase and the Pacific region growing by 3%.
In contrast, rents in Europe, Middle East and Africa (EMEA) fell by 3% year on year in the third quarter, largely due to the effects of the economic downturn in markets including Spain, Ireland and Greece. However, rents remained largely stable and some cities have seen significant annual rental growth, with Edinburgh and London growing by 25% and 20% respectively compared to the same period in 2009.
New York City continues to dominate as the world’s most expensive retail market, with prime rents at US$1,800 per square foot per annum. Sydney moved into second place globally at US$1,218 per square foot per annum and Hong Kong ranked third at US$1,113. London remains in fourth place, after recording a 20% annual increase in retail rents year on year to US$891 and Tokyo rounds out the top five locations at US$804.
Emerging markets continue to outperform some of the more mature economies with Latin America’s economic performance continuing to outpace North America due to the ongoing growth of the region’s middle class and the demand for commodities on a global basis. Sao Paulo has seen some of the fastest growing retail rents in the past 12 months with a 30% increase year on year. Rio de Janeiro also features in the top five fastest growing markets with 23% annual growth.
‘Consumer confidence across Europe in 2010 has been volatile but we are seeing marked improvements compared to last year. However, retailer confidence has entered positive territory for two consecutive months in September and October 2010 for the first time since early 2008. Retailers continue to target the best stores in the best locations and this is exacerbating the polarization of the market between the best and rest. Whilst vacancy levels are low in most prime retail destinations, many secondary locations are at record highs,’ said Peter Gold, head of Cross-Border Retail EMEA, at CBRE.
On a regional basis London, Paris and Zurich top the retail rents ranking in the EMEA region. Over the last quarter, rents remained flat in the majority of locations. Zurich and Oslo have seen some of the most significant rental increases quarter on quarter with 6.7% and 7.1% growth respectively, with the largest rental falls in Madrid, down -14% and Abu Dhabi, down 8.3%.
US cities continue to lead the most expensive retail rents in the Americas region. Los Angeles and Chicago rank at 12th and 13th respectively within the global ranking, following New York as the most expensive destination in the world. While Latin America has seen some of the strongest growth in retail rents, with Sao Paulo and Rio de Janeiro increasing by 30% and 23% respectively year on year.
Asian retail markets have benefited from the regional economic upswing and retail property performance continued to diverge across mature and emerging markets in the region. The average prime rent stabilized and in some markets saw a minor uptick, most notably in Shanghai, Beijing, Guangzhou, Tokyo, Taipei and Hong Kong with the majority either stabilizing or posting modest growth.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.