Prime retail rents have fallen in almost every region across the world as the global recession impacts consumer sentiment and retail sales, according to a new retail research from CB Richard Ellis (CBRE), Global Retail MarketView Q1, 2009.
Demand for retail space has declined in most markets across the world as consumers cut back on spending and unemployment continues to rise in many countries. New Delhi saw a 25% decline in a six-month period.
As per the report, emerging and less established markets have been most significantly affected. Buenos Aires saw the largest annual decline in retail rents year-on-year with a drop of 37%, followed by Warsaw with 33% and Washington DC with 26%. Whilse some markets have continued to experience year-on-year increases in retail rents, in many cases the current pressure is downward.
Despite a 10% year-on-year rental decline, New York remains the world’s most expensive retail destination, with rental values totalling $1,800/sqft per annum. New York’s retail rents stand at nearly double those of Hong Kong, which still ranks in second place globally with rents of $975/ sqft per annum. In an interesting switch, Moscow has replaced superseded Tokyo in the ranking, moving to the third place from fourth, followed by Paris and Tokyo, respectively, making up the top five most expensive retail locations.
Anshuman Magazine, chairman and managing director, CB Richard Ellis, said: “Rentals in Delhi NCR have corrected further when compared to the beginning of 2008. Retailers feel that rentals have corrected to sustainable levels and are using this period judiciously to take up positions on favourable terms. Rentals are also being renegotiated to make retail operations financially viable.” Another trend that has been witnessed during this time is of developers adopting a renewed stance towards revenue share agreements, as opposed to earlier, when the demand situation was more favourable, the chairman & managing director added.
Nick Axford, head, EMEA Research and Consulting, CB Richard Ellis, said with unemployment rising and consumer confidence and spending weakening across most parts of the world, most retail property markets were experiencing reduced demand from retailers and an increase in the number of vacant units, which is, in turn, affecting rents. More profitable retailers are actually jumping on rare opportunities to move into prime units whenever vacancies emerge in top high-street locations.