London's West End is still one of the world's most expensive retail destinations as retailers focus on the major fashion capitals, pushing global rents in prime locations even higher, according to the latest CB Richard Ellis (CBRE) Global Retail MarketView.
New York's Fifth Avenue remains the world's most expensive high-street destination, with rental values reaching US $1,900/ft²/year - an increase of more than 10% in the last 12 months. London's West End (US $909/ft²/year) held fourth position despite rental growth remaining flat year-on-year (y-o-y).
There was little change in the CBRE global retail rent rankings from the previous quarter. The notable exception was Hong Kong, which moved up to second position and became the fastest growing market in Q1 2011 following a rental hike of 46% quarter-on-quarter due to a number of high-profile leasing deals completed at key locations on Pedder Street.
Sydney (US $1,301/ft²/year) dropped to third position in the rankings due to flat growth y-o-y, while Zurich rose to fifth position after experiencing rental growth of 9% (US $829/ft²/year).
The overall total of rents recorded by CBRE grew by 1.9% in Q1 and by 3.8% y-o-y. Rental levels grew by 6.9% y-o-y in the Americas as spending increased and consumer confidence and employment levels improved. Asia Pacific experienced rental growth of 11.1% y-o-y despite enduring a series of natural disasters during the first quarter such as the Christchurch earthquake, floods in Queensland, and the Japan earthquake and tsunami. Although there has undoubtedly been an economic impact, this has so far been confined to the directly affected markets.
In contrast, rents in EMEA grew by just 0.5% y-o-y as concern about the PIIGS (Portugal, Ireland, Italy, Greece, Spain) economies increased and high unemployment continued to affect consumer expenditure growth.
Ray Torto, Global Chief Economist, CB Richard Ellis, commented: "The recovery in the global economy is multi-speed. Economic growth continues to be strong in Latin America and the Asia Pacific, but is much weaker in Europe and North America. In the developed economies, the ability to maintain interest rates at a level that will encourage sustainable economic growth, while also keeping a lid on inflation, will be the key challenge.
"It remains a testing time for retailers, particularly in developed markets, where fewer new shopping venues are making it more difficult for retailers to access the prime space they require. Not only is this putting upward pressure on rents in the most sought after