Mariwyn Evans is a former REALTOR® Magazine writer and editor, covering both residential brokerage and commercial real estate topics.
Scarcity and Name Recognition Drive Retail Rents
Large, dense, affluent populations make for top shopping streets.
March 15, 2013
Consumer demand may still be erratic, but a preference for eclectic shops with built-in cachet boosted rents along many of the most prestigious U.S. and international shopping streets this year, according to the 2012 Global Retail Highlights report from Colliers International. Top locations from New York’s Fifth Avenue and Chicago’s North Michigan Avenue to Queens Road in Hong Kong and Old Bond Street in London saw double-digit rent increases in the last year, the survey found. Among the U.S. shopping streets that saw significant rent growth were Atlanta’s Peachtree Street (10 percent), Miami’s Lincoln Road (33.3 percent), New York’s Madison Avenue (39.7 percent), and San Diego’s Prospect Street (10.9 percent). Although three of the ten highest-rent retail streets were in Hong Kong, NYC’s Fifth Ave. posted the highest global rents, at an average of $2,633 per square foot.
What sets these booming shopping streets apart? “It’s a cliché, but it’s really a question of supply and demand that is driving up retail rents,” says Mark Keschl, national director of retail services for Colliers. “There are only a handful of streets that every retailer wants.” A street’s name recognition matters, especially for attracting regional or international shoppers, says Keschl. For example, he says, Denver residents may know that the Cherry Creek area has many exclusive shops and restaurants, but the street doesn’t have the name recognition to attract tourists or regional shoppers that a Fifth Avenue does. Other factors behind the appeal of top shopping streets: large, dense, affluent populations; active tourism; and a city size large enough to support multiple stores, allowing retailers to build synergies.