Prime retail rental stabilise: CBRE

Prime retail rents in the world's leading shopping destinations stabilised in the majority of markets, and grew in a number of major cities, in the first quarter of 2010, according to the latest CB Richard Ellis (CBRE) Global MarketView report.

As the global economic recovery begins to gather momentum, consumer and retailer confidence have started to improve. 'This has still not translated into retail sales growth in most markets but demand for prime retail space remains healthy and vacancy in the best locations is low. As a result, there are some markets globally where prime rents are rising, and many more where the rate of decline has slowed or rents are now stable.

EMEA continues to dominate the world’s most expensive retail markets, with 10 of the top 20 destinations. London, Paris and Moscow emerged as the three most expensive EMEA markets in Q1 2010. The EU-27 retail rent index decreased by -0.2% in Q1 2010, a decline of -0.5% year-on-year.

Overall, the EMEA region had a quarterly decline of -1.7%; prime retail rents fell in several markets, including Abu Dhabi, which experienced a 24.5% decline, and Athens, which fell 12.3% quarter-on-quarter. Occupier demand across EMEA remains fairly stable and retailers continue to negotiate with landlords to secure longer rent-free periods and more favourable lease terms. However, demand for prime stores is strong and this is reflected in the stabilisation and, in some markets, growth in rents.

Commenting on trends in the EMEA region, Peter Gold, Head of Cross-Border Retail - EMEA, CBRE, said: 'Whilst performance across Europe remains diverse, many retail markets in Western Europe have rebounded surprisingly well in the first quarter of 2010, including London, Paris and Berlin. In some instances competitive tensions have arisen again, with retailers bidding aggressively to secure the best sites. As elsewhere in the world, the gap between prime and secondary locations and markets remains acute, as was the case in 2009. It is too early to tell whether this gap will reduce during the remainder of the year.'