London has recorded the highest prime retail rental growth in the world, registering an annual uplift of 53.8%, according to new data from CBRE.
The UK capital saw prime retail rents soar in the second quarter of the year compared with the same period last year.
Overall, EMEA registered a 6.2% growth in prime rents, the highest of the four regions in the survey. The Americas rose 3.9% as global growth figures averaged 3.7%.
Rome was the second fastest growing market in the world, registering uplifts of 28.9% in prime retail rents, largely due to low availability in prime areas. Italy achieved a double win with Milan coming third in Europe and fourth in the world, as rents rose 20% year on year.
'Retailers are continuing to see the importance of the physical store and are benefiting from having key stores in prime areas to grow their brand,' commented Andrew Phipps, head of UK & EMEA Retail Research at CBRE. 'It’s interesting to see that among the top five markets for rental growth are the traditional fashion capitals of London, Milan and New York, demonstrating that retailers are willing to pay high rents to be present in the most prime areas of these cities, often where supply and availability of space remains limited.'
While New York remains the most expensive prime retail hotspot in the world, with rents priced at $4000 per ft2 per year (nearly €40,000 per m2 per year), more than double its nearest rival, Hong Kong, London's New Bond Street is the third priciest location, at $1,684 per ft2 per year (about €16,500 per m2 annually).
Other European markets among the top 10 for prime rental growth included: Sofia, Bulgaria (12.5%) and Warsaw, Poland (11.1 %).
'The cooling off of China’s economy has manifested itself in sharply lower rents in Hong Kong, which has allowed a new crop of retailers to enter the coveted city,' said Anthony Buono, chairman of CBRE’s global retail executive committee.
'At the same time, prime retail rents in New York can remain stable, but in the near term we will see more landlord concessions to accomplish rate stability. London, however has such scant supply of available prime space that its strong rent growth is likely to continue,' Buono concluded.
