News »
11. Juli 2012 
Print
Print
Global economy still slowing overall industry momentum
The most desirable global retail properties continue to show explosive year-over-year rental-rate growth despite continued economic uncertainty, according to Summer 2012 Global Retail Highlights report just published by Colliers International’s Retail Services Group.
In the report, Ann Natunewicz, National Manager of Retail Research and principal author of the report, explains: “At a regional level, streets in areas that entered 2007-08 better-positioned economically —Australia, Canada, parts of Eastern Europe — had a higher percentage of flat-to-higher rents than those slower to emerge from the recession. We will be watching these areas closely: even as they represent some of the most attractive destinations for expansion-minded companies and yield-seeking investors, they too are vulnerable to softening consumer demand and, for those with reliable data, encroachment of e-commerce.”
Lack of sufficient, high-quality retail sites in the most sought-after retail corridors is a pervasive issue worldwide. “Looking ahead, some of the trends we’re seeing suggest the need for developers to unearth obsolete and existing inventory for renovation and revitalization in the coming years,” said Natunewicz. “On several high streets, we’re seeing the demand for retail space exceed the supply, especially in China and in Europe, Middle East and Africa (EMEA).”
An outline of Collier´s report:
United Kingdom
Asking Zone A rents on Bond Street, the priciest European location in our survey, rose 11% year over year to $1,601 SF on escalating interest from international luxury retail brands to operate a brick-and-mortar presence there. Current conditions reflect a gap between shop rents in the swankiest and humblest locations that is wider than ever. Wealthy international shoppers have turned a national north-south divide into a chasm between the choicest parts of central London and everywhere else, an accelerating trend over the last two years. Elsewhere, the worst-hit towns are charging rents as low as 2.5% of those levels as government budget cuts hit consumers’ spending power. Worryingly, there are signs that small towns’ high street pain may be spreading to larger cities as the U.K. entered recession in Q4 2011.
Luxury brands’ insatiable appetite to locate on Bond Street kicks off a chain reaction with several effects. Higher rental rates and ensuing competitive frenzy have created a huge incentive to own real estate, motivated by a desire to hold “safe” assets during the current economic crisis and also to hedge against rising rents. Retailers that own their spaces safeguard against rivals and can later maneuver to become landlords, waiting until competitors’ leases expire to take control of their space (as one recent example, the parent company of Max Mara bought stores owned by Etro and Bottega Veneta). High rents and long-term space constraints are also forcing London's luxury retail map to expand beyond its top dozen or so streets. Formerly run-down areas with edgy images such as Shoreditch (in east London) are rising as alternative shopping areas with new boutiques, cafes, and top fashion houses such as Ralph Lauren and Vivienne Westwood are expected to move in.
Germany
Demand for retail space in the high streets of the largest German cities remains very high, far exceeding available supply. International clothing retailers retailers (TKMaxx, Primark) and the food service tenants are the largest demand drivers, intensifying competition for good spaces in strong submarkets. This leads to at least stable, but more often increasing, prime rents in the high streets.
In medium-sized cities, new shopping center development activity is increasing, but not quickly enough to meet supply needs with a large amount of existing inventory that is old and risking obsolescence. Looking ahead, developers and owners must make renovation and revitalization a priority in the next 3-5 years.
France
Like the U.K., France remains a bipolar market. Its prime streets and centers, most notably in Paris, have seen some stability or rental rate increases; Avenue des Champs-Élysées, the most expensive retail location in France, has welcomed such new tenants as Abercrombie & Fitch, Marks & Spencer, and Banana Republic. France’s high debt levels and recent change in leadership suggest a postponement of austerity measures on a population whose consumer spending has risen a paltry 2% since 2007.
In the report, Ann Natunewicz, National Manager of Retail Research and principal author of the report, explains: “At a regional level, streets in areas that entered 2007-08 better-positioned economically —Australia, Canada, parts of Eastern Europe — had a higher percentage of flat-to-higher rents than those slower to emerge from the recession. We will be watching these areas closely: even as they represent some of the most attractive destinations for expansion-minded companies and yield-seeking investors, they too are vulnerable to softening consumer demand and, for those with reliable data, encroachment of e-commerce.”
Lack of sufficient, high-quality retail sites in the most sought-after retail corridors is a pervasive issue worldwide. “Looking ahead, some of the trends we’re seeing suggest the need for developers to unearth obsolete and existing inventory for renovation and revitalization in the coming years,” said Natunewicz. “On several high streets, we’re seeing the demand for retail space exceed the supply, especially in China and in Europe, Middle East and Africa (EMEA).”
An outline of Collier´s report:
United Kingdom
Asking Zone A rents on Bond Street, the priciest European location in our survey, rose 11% year over year to $1,601 SF on escalating interest from international luxury retail brands to operate a brick-and-mortar presence there. Current conditions reflect a gap between shop rents in the swankiest and humblest locations that is wider than ever. Wealthy international shoppers have turned a national north-south divide into a chasm between the choicest parts of central London and everywhere else, an accelerating trend over the last two years. Elsewhere, the worst-hit towns are charging rents as low as 2.5% of those levels as government budget cuts hit consumers’ spending power. Worryingly, there are signs that small towns’ high street pain may be spreading to larger cities as the U.K. entered recession in Q4 2011.
Luxury brands’ insatiable appetite to locate on Bond Street kicks off a chain reaction with several effects. Higher rental rates and ensuing competitive frenzy have created a huge incentive to own real estate, motivated by a desire to hold “safe” assets during the current economic crisis and also to hedge against rising rents. Retailers that own their spaces safeguard against rivals and can later maneuver to become landlords, waiting until competitors’ leases expire to take control of their space (as one recent example, the parent company of Max Mara bought stores owned by Etro and Bottega Veneta). High rents and long-term space constraints are also forcing London's luxury retail map to expand beyond its top dozen or so streets. Formerly run-down areas with edgy images such as Shoreditch (in east London) are rising as alternative shopping areas with new boutiques, cafes, and top fashion houses such as Ralph Lauren and Vivienne Westwood are expected to move in.
Germany
Demand for retail space in the high streets of the largest German cities remains very high, far exceeding available supply. International clothing retailers retailers (TKMaxx, Primark) and the food service tenants are the largest demand drivers, intensifying competition for good spaces in strong submarkets. This leads to at least stable, but more often increasing, prime rents in the high streets.
In medium-sized cities, new shopping center development activity is increasing, but not quickly enough to meet supply needs with a large amount of existing inventory that is old and risking obsolescence. Looking ahead, developers and owners must make renovation and revitalization a priority in the next 3-5 years. France
Like the U.K., France remains a bipolar market. Its prime streets and centers, most notably in Paris, have seen some stability or rental rate increases; Avenue des Champs-Élysées, the most expensive retail location in France, has welcomed such new tenants as Abercrombie & Fitch, Marks & Spencer, and Banana Republic. France’s high debt levels and recent change in leadership suggest a postponement of austerity measures on a population whose consumer spending has risen a paltry 2% since 2007.
Fotos: Colliers International’s Retail Services Group
