Tokyo’s Ginza has overtaken Sydney into second spot behind Causeway Bay in the latest DTZ/Cushman & Wakefield Asian retail rent rankings.
The annual Main Streets Across the World report tracks 462 of the top retail streets around the globe, ranking them by their prime rental value.
Globally just 36 per cent of the markets witnessed an increase in rent rates, a reflection of the growing power of eCommerce and economic challenges in many economies around the world.
New York’s Upper 5th Avenue, which saw its first decrease in annual rents per square foot since the financial crisis, and Causeway Bay remain more than twice as expensive as the leading street in any other country. So while Causeway Bay rents fell year-on-year, it had no impact on its ranking.
But DTZ/Cushman & Wakefield says the downward pressure on Hong Kong retail rents is creating an opportunity for some retailers looking to snap up units on prime pitches in good rental terms.
In Asia, Beijing’s Wangfujing has lept two places into eighth at the expense of Guangzhou’s Ti Yu Zhong Xin District, and Kuala Lumpur’s Pavilion has fallen one spot to 12th. Ho Chi Minh City in Vietnam has jumped two spots to 14th and is now more expensive than Auckland, Nanjing and New Delhi.
DTZ/Cushman & Wakefield commentators say advances in technology will shape the consumer experience of retail as well as drive the way how people shop and live in the future, placing more pressure on retail rents.
“We have seen an increasing number of retailers in Hong Kong continually enhance shoppers experience through leisure offerings and differentiate their market positions to maintain competitiveness under the impact of eCommerce disruption,” said Kevin Lam, DTZ/Cushman & Wakefield’s head of business space, Hong Kong.
“Though we could see that some high street rents were close to the bottom in Q3, eCommerce disruption so far on rents is rather indirect in view of close proximity in Hong Kong.”
Elsewhere, Chinese brick-and-mortar retailers are facing stiff competition from the growing eCommerce market and the emerging trend is to partner with online-to-offline platforms in an attempt to capture these changing trends in consumer behavior. In parallel, both retailers and landlords are raising the bar on the experience offered to consumers by expanding the food and beverage and leisure offerings.
Theodore Knipfing, Cushman & Wakefield’s, head of retail, Asia Pacific, says retailers continue to be cautious in their store expansion across the region due to concerns including continued global economic instability, and this will continue well into 2017.
“When expansion does happen, the focus is typically on quality over quantity. All in all, despite the cautious outlook across the region, major international and regional retailers will have to eye overseas growth, as their respective domestic markets reach saturation point and investors demand results.”
In the global rankings, the Champs Elysees in Paris comes third followed by New Bond St, London, Tokyo’s Ginza and the Via Montenapoleone in Milan. Pitt St mall in Sydney is seventh followed by Seoul’s Myeongdong district, the Bahnhofstrasse in Zurich and Vienna’s Kohlmarkt.
Click here to download a copy of the report.