Plaza District pride of NY.
The No. 1 position belongs to Midtown Manhattan's Plaza District, New York's key business and shopping district. This confirms the city as the shopping capital of the world.
Retail rents in the Plaza District (the corridor of Fifth Ave., Madison Ave. and East 57 th St. from Fifth to Park Avenues) have reached $850 a s/f. In second place comes Paris' Avenue des Champs Elysees, followed by Hong Kong's Causeway Bay.
Main Streets Across the World monitors retail rents in 226 top locations in 45 countries around the world on an annual basis.
Stable and rising retail rents in U.S. markets are another sign that consumers have been a major driving force in the economic recovery. This marks the first recession since 1949 which did not have even one quarter with a decline in spending. Growth has been strong in categories such as apparel, furniture and household equipment.
Consumers benefited from tax cuts, increased discretionary income as a result of refinancing at lower interest rates and discounted pricing by retailers. Economy.com is forecasting that retail sales growth during this holiday season will be the best since 1999.
Midtown Manhattan's Plaza District, which has New York's highest density of luxury hotels, has also seen some of the world's biggest increases in retail rents, with a rise of 21% over the past year. The Plaza District includes the 'golden crossroads' at the junction of Fifth Ave. and E. 57 th St., occupied on its four corners by Tiffany, Bergdorf Goodman and Bulgari.
One block east of Fifth Ave., one of the newest arrivals this year has been Montblanc, where the luxury goods retailer has taken a 5,200 s/f unit. Other luxury retailers to have taken new space or expanded existing units in the Plaza District include Salvatore Ferragamo, replacing Banana Republic, Bottega Veneta, replacing Club Monaco, and Yves St. Laurent, replacing Levis.
Gene Spiegelman, senior director of retail services with Cushman & Wakefield's New York office, comments: "The feeling this autumn along the avenues and streets of New York is one of optimism--the economy is doing better, the tourists are back, and the group of world names in luxury retailing looking to break into the prestigious Manhattan market is once again lengthening."
Many of the world's top shopping destinations have seen rents increase over the last year. Shoppers are demanding more from their shopping experience: they want a greater sense of 'destination,' more fun, more to do, but they want the prices of what they buy to be competitive.
Retailers are responding to these demands by seeking larger, modern units in the most accessible and highest profile locations--whether Fifth Ave. in New York or Portal de l'Angel in Barcelona. The best areas are getting better--attracting the cream of the retail world, with a resulting increase in rents. But the mediocre areas are falling away--with less demand, more empty shops and falling values.
Retail will benefit from the current economic upturn. But this will not be for all destinations and all retailers. Some are likely to fail because they have the wrong retail format, the wrong offer or are in the wrong location. Others are benefiting from the emergence of new 'capitals' of retail, where they are introducing new retail formats--whether in Eastern and Central Europe, or Asia Pacific.
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|Publication:||Real Estate Weekly|
|Date:||Nov 12, 2003|
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