Coming out on top is New York’s Fifth Avenue, which retains its top ranking as the world’s most expensive retail destination. This is despite recording flat rental growth year-over-year.
Milan’s Via Montenapoleone jumped a spot into second, displacing Hong Kong’s Tsim Sha Tsui, which placed third in 2023.
New Bond Street in London and the Avenues des Champs-Élysées in Paris retained fourth and fifth positions, respectively.
The biggest mover was Istiklal Street in Istanbul, up from 31st to 20th position, as rampant inflation caused rents to more than double over the past year.
These locations are linked to the luxury retail sector, the rental values of which have been relatively immune to additional discounts, incentive packages or shared risk rental models that have become more prominent in the wider retail markets globally.
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The outlook for retail rental
As the world continues to emerge from the impacts of the global pandemic, prime brick-and-mortar retail destinations have continued their rebound, recording mostly positive rental growth over the past year.
Rents across global prime retail destinations continued their ongoing recovery, reportedly increasing on average by 4.8% in local currency terms over the past year. The strongest growth was recorded in Asia Pacific, which averaged 5.9%, with Europe at 4.2% and the Americas at 5.2%.
Notwithstanding comparatively strong growth over the past year, in most instances, the increase in rents did not match levels of peak inflation.
Furthermore, almost 60% of markets globally remain below pre-pandemic rental levels. This is most evident in Europe where 70% of markets are below pre-pandemic rents. In contrast, in the US, only 31% are below pre-pandemic levels; 69% are above.
Head of Americas retail Barry Scardina explained: “The retail sector has continued to face issues head on while demonstrating its resiliency. The near-term outlook for the retail sector remains cautious, but at the same time is nuanced between sub-sectors and geographical locations.”