Prime retail rents in the world’s leading retail destinations have stabilised, with some markets now witnessing rental growth as the economic recovery gathers momentum and consumer confidence starts to improve, according to CB Richard Ellis' (CBRE) latest Global Retail MarketView. Demand for prime retail space in most markets remains strong, with some cities seeing substantial annual growth at the end of the third quarter of 2010.

Prime retail rents in the world’s leading retail destinations have stabilised, with some markets now witnessing rental growth as the economic recovery gathers momentum and consumer confidence starts to improve, according to CB Richard Ellis' (CBRE) latest Global Retail MarketView. Demand for prime retail space in most markets remains strong, with some cities seeing substantial annual growth at the end of the third quarter of 2010.

Prime retail rents globally increased by 0.2% from the second quarter to the third quarter of 2010. Rents on a year-on-year basis grew in three of the major global regions, with the Americas seeing the highest rental increase (6% year-on-year), Asia following with a 4% increase and the Pacific region growing by 3% year-on-year. In contrast, rents in Europe, the Middle East and Africa (EMEA) fell by 3% year-on-year in Q3 2010, largely due to the effects of the economic downturn in markets including Spain, Ireland and Greece. However, rents remained largely stable in most EMEA markets in Q3 and some cities have seen significant annual rental growth, with Edinburgh and London growing by 25% and 20% respectively compared to the same period in 2009.

New York City continues to dominate as the world’s most expensive retail market, with prime rents at $1,800 (EUR 1,335) per sq ft per annum. Sydney moved into second place globally (from third in Q2 2010, at $1,218/sq ft/annum) and Hong Kong ranked third ($1,113/sq ft/annum). London remains in fourth place, after recording a 20% annual increase in retail rents year-on-year (now $891/sq ft/annum) and Tokyo rounds out the top five locations ($804/sq ft/annum).

London, Paris and Zurich respectively top the retail rents ranking in the EMEA region, with London overtaking Moscow as the fourth most expensive market in the world in Q3 2010. Although Europe has been trailing behind Asia and the Americas in terms of the global recovery, GDP growth in Western Europe has been stronger than expected, particularly in Germany where the economy grew by 2.2% in the second quarter of 2010. Europe continues to remain an attractive target for international retailers and occupier demand for prime retail locations has been relatively strong, with vacancy levels low and prime rental levels remaining stable. Over the last quarter (Q3), rents remained flat in the majority of locations. Zurich and Oslo have seen some of the most significant rental increases quarter-on-quarter with 6.7% and 7.1% growth respectively, with the largest rental falls in Madrid (-14%) and Abu Dhabi (-8.3%).

Peter Gold, head of Cross-Border Retail - EMEA, CBRE, said: 'Consumer confidence across Europe in 2010 has been volatile but we are seeing marked improvements compared to last year. However, retailer confidence has entered positive territory for two consecutive months in September and October 2010 for the first time since early 2008. Retailers continue to target the best stores in the best locations and this is exacerbating the polarisation of the market between the best and rest. Whilst vacancy levels are low in most prime retail destinations, many secondary locations are at record highs.'