Moscow now boasts three out of the top five most expensive prime retail locations in Europe (in terms of rental costs), namely Stoleshnikov Lane, Petrovka Street and Tverskaya, according to Jones Lang LaSalle's first report on Prime High Street Rents in Europe. The Champs Elysees, Paris remains the most expensive high street in Europe in rental terms, followed by Stoleshnikov Lane in Moscow and New Bond Street in London.
James Dolphin, Head of European Retail Agency at Jones Lang LaSalle, commented: "The prime high streets of Europe have performed relatively well over the last year and in some cases have prospered, despite turbulence in the financial markets and pressure on consumer spending. In general prime rental levels are expected to remain stable across the region as the weaker consumer spending growth in most of Europe is counter balanced by the continuing strength of occupier demand for the best locations."
In Moscow strong demand from an increasingly wealthy population, a shortage of available space and a low level of transparency mean that rental growth is expected to continue. The primary cities of Greece and Turkey saw some of the highest rental increases with Tsimiski Street in Thessaloniki, Ermou Street in Athens and Bagdat & Istiklal Streets in Istanbul all recording an annual growth of over 25% (mitigated somewhat in Turkey by inflation at 10%). This is due largely to a limited supply but strong demand for units, particularly from international brands.
In the 12 months since the start of the credit crunch, almost 70% of all locations assessed within the report registered some level of rental growth between Q2 2007 and Q2 2008.
Neville Moss, Head of European Retail research at Jones Lang LaSalle, added: "Several prominent locations in mature markets, particularly Germany and The Netherlands, are also anticipated to see solid rental growth through the year despite a projected slowdown in the economy, again largely thanks to major International brands seeking representation and a scarce supply of prime space. Meanwhile, the outlook is less favourable for areas such as the Baltic States, where retail is concentrated within shopping centres and their economies face particular imbalance. A handful of western European locations, are also expected to see some downward pressure on rents, most notably in Spain."
Source: Jones Lang LaSalle