- Best in class physical retail passes Covid-19 ‘stress test’ with global rebound in rents
- Luxury brands showing resilience and cities experience increase in leasing activity
- Cushman & Wakefield’s global report tracks 92 cities
New York’s Fifth Avenue has reclaimed its position as the world’s most expensive retail street, with average rents of $2,000 USD/sq ft/yr (€21,076/sq m/yr) according to a new global ranking from real estate services firm Cushman & Wakefield.
Pegging the Hong Kong dollar to the U.S. dollar has helped Hong Kong maintain a high-ranking position in 2022 in second, with Tsim Sha Tsui at $1,436 USD/sq ft/yr (€15,134/sq m/yr) displacing Causeway Bay as the territory’s representative in the rankings.
In third, Milan’s Via Montenapoleone at $1,380 USD/sq ft/yr (€14,547/sq m/yr) is Europe’s most expensive shopping street for the first time, climbing above New Bond Street in London and Avenue des Champs Élysées in Paris.
Cushman & Wakefield’s flagship ‘Main Streets Across the World’ report, first launched in 1988, tracks the top retail streets across 92 cities and ranks the most expensive by prime rental value utilising Cushman & Wakefield’s proprietary data. An annual report until 2019, this is the first since then – allowing insight into comparative performance pre- and post-pandemic.
| Global Ranking 2022 | Ranking Pre-Covid | Location | City | Rent (USD/sq ft/yr) |
Rent (EUR/sq m/yr) |
Pre-Covid to present (local currency) |
Y-o-Y (local currency) |
|---|---|---|---|---|---|---|---|
| 1 | 2 | Upper 5th Avenue (49th to 60th Sts) |
New York City | $2,000 | €21,076 | 14% | 7% |
| 2 | 1 | Tsim Sha Tsui (main street shops) |
Hong Kong | $1,436 | €15,134 | -41% | -5% |
| 3 | 5 | Via Montenapoleone | Milan | $1,380 | €14,547 | 9% | 7% |
| 4 | 3 | New Bond Street | London | $1,361 | €14,346 | -11% | -7% |
| 5 | 4 | Avenue des Champs Élysées | Paris | $1,050 | €11,069 | -18% | -4% |
| 6 | 6 | Ginza | Tokyo | $945 | €9,956 | 0% | 5% |
| 7 | 8 | Bahnhofstrasse | Zurich | $847 | €8,927 | -3% | -1% |
| 8 | 7 | Pitt Street Mall | Sydney | $723 | €7,624 | -24% | -7% |
| 9 | 9 | Myeongdong | Seoul | $567 | €5,973 | -23% | -15% |
| 10 | 10 | West Nanjing Road | Shanghai | $496 | €5,225 | -14% | -14% |
| 1 | 2 | Upper 5th Avenue (49th to 60th Sts) | New York City | $2,000 | €21,076 | 14% | 7% |
| 2 | 1 | Tsim Sha Tsui (main street shops) | Hong Kong | $1,436 | €15,134 | -41% | -5% |
| 3 | 5 | Via Montenapoleone | Milan | $1,380 | €14,547 | 9% | 7% |
| 4 | 3 | New Bond Street | London | $1,361 | €14,346 | -11% | -7% |
| 5 | 4 | Avenue des Champs Élysées | Paris | $1,050 | €11,069 | -18% | -4% |
| 6 | 6 | Ginza | Tokyo | $945 | €9,956 | 0% | 5% |
| 7 | 8 | Bahnhofstrasse | Zurich | $847 | €8,927 | -3% | -1% |
| 8 | 7 | Pitt Street Mall | Sydney | $723 | €7,624 | -24% | -7% |
| 9 | 9 | Myeongdong | Seoul | $567 | €5,973 | -23% | -15% |
| 10 | 10 | West Nanjing Road | Shanghai | $496 | €5,225 | -14% | -14% |
Source: Cushman & Wakefield
Robert Travers, Head of EMEA Retail at Cushman & Wakefield, said: “The industry has been through one of the biggest stress tests imaginable over the past few years, but best in class retail real estate has remained robust. While we now face new economic challenges, the conversation has shifted from pessimism to retail´s omnichannel evolution.“Many brands are playing the long game and seeking to secure prime opportunities to adapt to ever demanding customer needs. With further investment in high-quality in-store experiences and advances in omnichannel approaches, we are confident in the resilience of the sector, particularly at the luxury end, and in key global destination cities.”
The Road to Recovery
Rents across global prime retail destinations declined by 13% on average at the peak of the Covid-19 pandemic but have subsequently rebounded to just 6% below pre-pandemic levels. Global rental growth over the past year averaged 2% but has varied tremendously.
APAC was the most impacted region during the pandemic period with rents falling 17% on average, mainly due to border closures affecting prime international tourist destinations. In EMEA, rental declines averaged 11%, while the decline in the Americas was just 7%, thanks in part to supportive fiscal policies and domestic migration patterns boosting buying power.
Since the pandemic nadir, global retail market rents have recouped approximately 50% of their losses. Much of that improvement has occurred through 2021 and into early 2022 before global economic headwinds started to negatively impact markets over the past six months.
Pandemic Retail Rental Change by Region
| Pre-Pandemic to Pandemic low | Pandemic-low to present | Pre-pandemic to present | |
|---|---|---|---|
| APAC | -17% | 7% | -12% |
| AMERICAS | -7% | 23% | 15% |
| EMEA | -11% | 4% | -8% |
| WORLD | -13% | 8% | -6% |
| APAC | -17% | 7% | -12% |
| AMERICAS | -7% | 23% | 15% |
| EMEA | -11% | 4% | -8% |
| WORLD | -13% | 8% | -6% |
Source: Cushman & Wakefield
Spotlight on EMEA
At the peak of Covid-19, rents in EMEA fell by an average 11% although varied considerably according to the severity of rolling lockdowns. Ireland, the UK, Spain and France experienced significant impacts as rents fell by up to 28% on average. Meanwhile, changes were minimal in parts of Eastern Europe such as Slovakia and Slovenia.
Prime rents have rebounded in the region to just 8% below pre-pandemic levels and at the beginning of 2022 the EU region recorded retail sales volumes 4.1% higher relative to levels when Covid-19 first emerged. However, recovery has and will continue to be challenged by inflation, impacting consumer demand and retailers alike.
Despite the challenging near-term economic outlook, Cushman & Wakefield has witnessed a wave of newcomers entering the market, exploring physical retail. Over the last 18 months, 75% of the retail transactions Cushman & Wakefield represented in EMEA were new leases, highlighting the value retailers place on a physical presence.
