HONG KONG-This city is the rising star for top retail rents, taking the top global spot in CBRE’s recent list of most expensive retail rent markets. Hong Kong had moved up to the number two spot, just below New York City, in Q1 2011, and a year later this Asian capital dominates the list at $3,864 per square foot, more than doubling its top rents recorded in early 2011.
New York City’s top rents average at $2,475 per square foot, and Sydney’s top rents come in third at $1,112 per square foot. Tokyo moved from sixth to fourth place at $1,025 per square foot over a year, while London, suffering from the European malaise, dropped to fifth at $956 per square foot.
Asia’s growth has also extended into shopping center development. Of the almost 30 million square feet of retail under development across the globe, about half of that is under construction in China, with another 20% in other Asian countries, according to CBRE.
However, the full picture is still somewhat weak global retail growth of about 0.8% in the first quarter (2.9% year over year), as the US markets are still going through store closings, Asia’s economic growth has started to slow and Europe treads water. The one key point for today’s market, says CBRE global chief economist Ray Torto, is that there’s still a clamor by retailers to get into the top cities.
“Equally, retailers continue to target the best locations in the more mature markets of Western Europe (London, Paris) and the wealthier markets in the Asia Pacific region,” Torto says. “The mismatch between demand and supply means that activity levels are not as high as they could be.”
There has been an increase in cross-border activity. US chains such as Forever 21, Victoria’s Secret and Kate Spade have recently entered or are about to enter the top Europe cities, and Canada is beset by US entries. Latin America has seen healthy interest from international retailers attracted by the dynamic growth of the region.
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