The most expensive downtown retail markets worldwide ranked by highest quoted rents per square foot.
The New World is encroaching on the Old World in terms of the most expensive retail rents. Princeton, N.J.-based NAI Global, a leading network of commercial real estate firms, found that only one U.S. area — Manhattan — ranks in the top 10. What’s more important, noted Jeffrey Finn, NAI Global president and chief operating officer, is the movement of Asian markets into the top 10. “You’ve got these old world, beautiful downtown streets in Europe that are now being transcended by the newer, rapidly rising Asian markets, such as Hong Kong and Seoul,” he said. “Downtown retail” is defined by NAI Global as “any retail space in the downtown area, excluding space in enclosed malls.”
1. HONG KONG
Highest quoted rent per square foot: $1,161
Hong Kong is undergoing yet another retail boom, so it’s perhaps not surprising that it should rank number one in terms of highest quoted rents. “Hong Kong is the New York of Asia,” Yves Carcelle, chairman and chief executive of Louis Vuitton, told WWDScoop. Vuitton has six major stores in the city, including a new one in The Landmark, which also includes tenants such as Dior, Harvey Nichols, Gucci and Fendi. NAI Global pointed out in its report that landlords have been favoring smaller fashionable tenants. Consumer demand for fashion is booming: Shoppers in Hong Kong spent 10.3 percent more on apparel in December than they did the previous year, WWD reported in February.
Though Central London is still recovering from the terrorist attacks last year, the retail market is showing a positive outlook for 2006, driven by a return to growth in employment, according to NAI Global. WWD reported Tuesday that London’s Sloane Square is in the midst of a major makeover: “The women and men strolling through the square are an altogether hipper and more international crowd. And they are eager to give their credit cards a fashion workout at nearby Cartier, Hugo Boss, Tiffany & Co. and Zara,” all of which have stores elsewhere in the city as well. London has always been a magnet for retail brands, and it’s just one of the cities that has been cited as a likely target for a new Balenciaga boutique, while Juicy Couture also is seeking a site in the British capital.
With high-end fashion brands such as Louis Vuitton, Yves Saint Laurent and Chanel having headquarters in this market, expensive rents for shops and shopping centers are only logical. Galeries Lafayette is the largest department store in France and in Europe. Its beautiful flagship (seen left), located on Boulevard Haussmann, is crowned by a stained-glass dome. The store carries designer, brand name and private label merchandise. Though the city’s retail market felt the effects of lower levels of tourism in 2005, plans are under way to upgrade or develop a number of shopping centers in the Paris region.
Sydney is in the midst of a retail boom, according to the Australian Property Institute. And in January, WWD profiled it as one of the most well-regarded cities in the world, stating that its “brand” image was one of the highest, according to a study conducted by Global Market Institute, together with leading brands expert Simon Anholt. One of the most magnificent shopping destinations is the historical Strand Arcade (at left), where unique specialty shops, such as Victoria & Albert Antiques and the Rox Gems & Jewellery store, are found. When it opened in 1892, the Strand Arcade was the fifth and the last one to be built in Victorian Sydney. Today it is the only one remaining in its original form.
Retail space is in high demand these days in Moscow, according to NAI Global. As wealth continues to grow in Russia, more and more brands are rushing in to open stores in the nation’s capital. Oscar de la Renta sent representatives for a trunk show in Moscow late last year, while Marc Jacobs also traveled to the city in December with one primary goal: “to get acquainted with the local culture, history, religion, traditional crafts, to talk to the most interesting people here, get the feeling and use it in Louis Vuitton clothes and accessories,” he told WWD. Vuitton has two stores in the city. Well-known shopping spots near Red Square include GUM (the state department store) and the Okhotny Ryad shopping center (seen left).
WWD said Wednesday that Singapore’s “strong economy and wide exposure to Western brands have made the city-state a shopping hub in Southeast Asia.” Singapore’s Orchard Road will soon become one of the premiere shopping streets in the world, thanks to the Singaporean government, which recently announced plans to spend $40 million on the street’s transformation. Private retailers are sitting up and taking note, and prime retail space is now experiencing increased demand. In 2005, Diane von Furstenberg talked of potential locations for future stores. “I am talking about Munich, I am talking about Shanghai and about Singapore,” she said. In January, Gap Inc. announced expansion plans into the region, as well.
According to NAI Global, retail sales in Austria have remained strong despite the country’s overall economic struggles. High-end retail in the center of capital city Vienna focuses around three major streets: the Kohlmarkt, Karntner Strase and Graben (seen at left). Retail demand and rents are very high on these pedestrian streets, mainly due to their prime location in the heart of Vienna. The Kohlmarkt is still considered to be the most upscale shopping street, where Gucci, Louis Vuitton, Armani and Chanel all have stores.
“Dublin is a classic example of a small, limited market with a downtown setting that is more of a shopping village, really,” said Jeffrey Finn of NAI Global. “The cultural value alone of the downtown region is high.” The real estate market here has long been considered a driving factor of the Irish economy, and 2005 witnessed the completion of Dundrum Shopping Centre, with anchors that include H&M, Tesco and the House of Fraser. Both Omni Park and Blanchardstown Shopping Centres are slated to increase their retail space significantly over the next couple of years. Grafton Street (seen left), is considered to be Dublin’s primary shopping street and boasts some of the most upscale stores, such as Brown Thomas and Jigsaw.
Though all eyes remain on the redevelopment of the World Trade Center site, a number of Manhattan’s districts have witnessed retail revitalization, including Harlem, the Lower East Side and Midtown near Columbus Circle. The highest rents are found along Madison and Fifth Avenues, primarily near 57th Street in Midtown. WWD reported in February that Bulgari is redesigning and expanding its 14,000-square-foot, three-story shop on Fifth Avenue. NAI Global made note of some of the larger retail deals in 2005, including Equinox’s purchase of 38,000 square feet in SoHo for its first gym in the neighborhood, and H&M’s rapid store expansion across the city.
This June, Paris-based Hermès plans to open a seven-story Maison Hermès in Seoul, while Prada works to open its second location (its first went up in 2005). NAI Global reported that “there is a concern that Korea may have more retail than the population can reasonably support, as the number of hypermarkets, in particular, exceeded the target level of one store for [every] 150,000 persons.” Stores with much larger formats, such as department stores and discount hypermarkets, currently dominate, with more than 70 percent of total market share. However, NAI Global predicted that some of these stores possibly could close during 2006.
Source: nai global’s 2006 global market report; for additional statistical data on domestic markets, go to wwd.com