- Sydney rents did not see any growth year on year.
- Melbourne's Bourke Street ranked eighteenth in the Asia Pacific.
- Brisbane's Queen Street Mall ranked twenty fifth in the Asia Pacific.
Sydney has clocked in one of the most expensive retail rents in the world, according to Cushman & Wakefield’s latest Main Streets Across the World report.
Delving into prime retail rental rates, the report found many retail rents around the world barely shifted from last year, with one notable exception in Milan.
New York City retains the crown
Upper 5th Avenue (49th to 60th Streets) recorded flat rental growth year on year. Despite this, it retained the top ranking as the world’s most expensive retail destination.
According to the report, rents along the street are US$2,000 per square foot per year, and are up 14% from pre-pandemic levels.
Globally, the retail sector has displayed resilience, according to report author and head of international research for Asia Pacific, Dr Dominic Brown.
“Retail has continued its path to recovery despite a new wave of post-pandemic challenges as central banks around the world have increased interest rates to tame the current inflationary cycle. In response, economic growth forecasts have been trimmed and consumers have reigned in discretionary spending.”
Among the highlights for the thirty third edition of the report, Milan’s Via Montenapoleone leapt to second place, displacing Hong Kong’s Tsim Sha Tsui, which slipped to third.
Via Montenapoleone recorded a 20% year on year rise, with rents coming in at US$1,766 per square foot per year.
Kuala Lumpur’s Suria KLCC left the top 20, with Istanbul’s Istiklal Street taking the twentieth spot, having risen from thirty first. The report noted this was in response to inflation which caused rents to more than double over the past year.
The state of retail
Rents recorded year-on-year growth, with the report finding the global average was up 4.8%.
The strongest rental growth was recorded in the Asia Pacific, up 5.3%, while the Americas saw 5.2% growth, and Europe was up 4.2%.
Rent levels remained weaker than pre-pandemic levels in 55% of markets across the globe, with the breakdown seeing 70% of European markets recording rental levels below pre-pandemic levels, 55% of APAC markets, and 31% of markets in the Americas.
|Global Ranking 2023||Global Ranking 2022||Market||City||Location||Rent (USD/sq.ft/yr)||Rent (EUR/sqm/yr)||Pre-pandemic to present (LCY)||YOY (LCY)|
|1||1||U.S.||New York City||Upper 5th Avenue (49th to 60th Sts)||$2,000||€ 20,384||14%||0%|
|2||3||Italy||Milan||Via Montenapoleone||$1,766||€ 18,000||31%||20%|
|3||2||Greater China||Hong Kong||Tsim Sha Tsui (main street shops)||$1,493||€ 15,219||-39%||4%|
|4||4||United Kingdom||London||New Bond Street||$1,462||€ 14,905||-11%||0%|
|5||5||France||Paris||Avenues des Champs-Élysées||$1,120||€ 11,414||-18%||0%|
|8||8||Australia||Sydney||Pitt Street Mall||$747||€ 7,612||-24%||0%|
|9||9||South Korea||Seoul||Myeongdong||$642||€ 6,542||-19%||5%|
Source: Cushman & Wakefield.
The luxury sector also continued to record profits, albeit at a reduced pace.
According to the report, over 95% of luxury brands reported profit growth in 2022, a trend which persisted into early 2023.
The slowdown was a result of higher interest rates forcing a normalisation of its customer base, which expanded during the pandemic.
While there are challenges ahead for 2024, high-end retail is expected to continue performing comparatively well thanks to its core customer base, which is typically more immune to rising living costs.
Sydney ranks eighth in the world, fifth in APAC
“In the global marketplace, Sydney’s Pitt Street Mall stands tall, holding its reign at 8th worldwide and proudly securing the 5th spot in the regional Asia Pacific arena,” said Dr Brown.
“As rents echo a pre-COVID cadence, the city’s resilience signals a potential ascent in the rankings, painting a promising picture of Sydney’s retail rebound.”
Melbourne also made an appearance, ranking among the best in the Asia Pacific region.
“The resilience and prominence of Melbourne’s retail market persist, solidifying its robust standing among the top 20 in the Asia Pacific region,” said Cushman & Wakefield’s director retail leasing, Michael DiCarlo.
“Currently undergoing significant transformations, the iconic Bourke Street retail area is in the midst of two major redevelopment projects. The recently announced opening of a Mecca Cosmetica flagship, spanning over 3000 square meters, adds to the city’s dynamic retail landscape.
“In the face of global economic uncertainties, Melbourne’s retail sector has adeptly overcome challenges by expanding luxury brands along Collins Street and enhancing premium hospitality options in the surrounding streets and lanes.
“Boasting a distinctive mix of renowned shopping districts, innovative retail concepts, and a dedicated commitment to fostering a vibrant consumer culture, Melbourne strategically positions itself through major events such as the Australian Open, Formula 1, and Fashion Week.
“This approach not only attracts locals but also establishes the CBD as a sought-after destination for tourists” he said.
Melbourne’s Bourke Street ranked eighteenth in the Asia Pacific, and Brisbane’s Queen Street Mall ranked twenty fifth in the Asia Pacific.