London has been named the second most expensive market in the world for retailers to rent stores.CBRE Research has unveiled its semi-annual Global Prime Retail Rents report, and the report is littered with many of the usual suspects. However, there are some surprises to be found in the ‘fastest growing rents’ section.
“New York remains the world’s most expensive retail location, however London showed the strongest annual rent growth and moved up to become the second most expensive market, according to CBRE Research’s semi-annual Global Prime Retail Rents. London’s overall performance was emblematic of the broad strength in Europe, which was the only global region to register rent growth,” according to CBRE. “Rents declined in the Americas, driven by weakness along the U.S. Eastern Seaboard. In Asia Pacific, rents fell, but key markets, notably Hong Kong, started to stabilize.
As Retail Week explains, while London took down the second spot on the most expensive list, the city also takes down the top spot in the fastest growing section with a whopping 39.1 percent increase on a year-on-year basis.
“London’s overall performance is emblematic of the broad strength we are seeing across the retail market in Europe. Demand for quality retail space in London remains robust and the arrival of brands such as New Balance and Nars has further underlined the importance of these prime shopping destinations,” explains Rhodri Davies, head of UK retail at CBRE. “However, an increase in occupational costs, as a result of business rates revaluation, has meant that retailers are increasingly being more selective about their choice of store location. This has resulted in a slowdown in the past six months of retailers transactions in London’s prime retail streets.”
A little further down the list of fastest growing cities for retail rents we find the city of Belfast, which is making some impressive headway in spite of being outpaced by rivals London and Dublin.
"As vacancy levels in Belfast's prime locations continued to fall, demand from occupiers resulted in positive rental growth for the first time in a number of years. A lack of supply coupled with strong demand, and the continued decrease in vacancy rates is likely to ensure improved market conditions,” notes Alana Coyle, retail director at CBRE. "Going forward, it is important for Belfast to develop and invest in prime retail locations to meet the demand of international retailers seeking to expand into the city.
Rounding out the top five on the most expensive front are Hong Kong, Paris, and Tokyo. For the fastest growing sector, London is followed by St. Petersburg, Russia, Auckland, New Zealand, Sofia, Bulgaria and Dublin, Ireland.