Strong Demand For Space In Prime Shopping Streets Puts Dublin In The Top 5
London, 17th July 2017 – London’s New Bond Street has taken the top spot for the fastest growing prime retail location in the world as it recorded prime rental growth of 39.1% in Q1 2017, compared to the same period last year, according to CBRE’s half yearly research report Global Prime Retail Rents. Meanwhile, Dublin was one of the EMEA cities to experience a higher than average increase in high street retail rents in the year to the end of Q1 2017, up 10.5% in the period.
Despite rental levels remaining stable quarter on quarter on New Bond Street, the UK’s capital has also ranked second among the world’s top 10 most expensive retail locations ($1,753 per sq ft per year in Q1 2017) with New York’s Fifth Avenue retaining its position as the world’s most expensive retail destination commanding $3,240 per sq ft per year. Hong Kong, Paris and Toyko make up the top five markets for prime retail rents.
The report which is based on the retail rent per square foot that retailers have to pay every year to occupy a shop in a prime location shows that Europe was the only region to register rental growth in Q1 2017 with an increase of 4.3% year-on-year. Many of Western Europe’s capital cities witnessed strong rental growth which is being driven by lack of supply in prime retail areas. This has led to retailers paying higher rents in these cities to guarantee brand awareness and further support their expansion plans within the region. The return of prosperity to the Irish and Spanish economies has also led to Dublin and Madrid registering rental growth of 10.5% and 6.4% respectively, in the past year.
St.Petersburg ranked second in the top 10 fastest growing retail locations and reported a 15.4% year-on-year growth; this was largely driven by an increase in tourism in the city. Retailers have shown strong demand for prime retail locations and similar to the growing trend in the wider retail industry, demand by Food & Beverage operators looking to enter markets has pushed the growth in rents. Auckland and Sofia were third with 12.5%, Dublin was fifth with 10.5% and Glasgow was sixth with 9.4%.
Demand for quality retail space in Dublin remains robust and the arrival of brands such as Victoria’s Secret and & All Other Stories onto Grafton Street has further underlined the importance of these prime shopping destinations. We expect to see some further upward pressure on Prime Zone A rents on streets such as Grafton Street over the coming months. The retail sector is rapidly evolving and is a highly competitive market, therefore, retail brands must focus on targeting consumers across multiple channels. The physical store remains an important part of the consumer journey and retailers will continue to target prime bricks-and-mortar locations to grow their brand. Stores will also become the place that customers use to interact with physical products and retailers will use to showcase and try innovative technology.
Demand for prime high streets such as Grafton Street and Henry Street is not limited to occupiers alone with strong investor demand for any high street investments that are offered for sale. Since 2013, there has been close to €442 million of investment transactions on Grafton & Henry Street. The largest proportion of these occurred in 2015 when assets such as Sovereign Portfolio traded. This portfolio was acquired by Irish Life for €154.8 million. Irish institutions have been the most dominant buyers of prime high street assets acquiring 62% of Grafton & Henry Street assets since 2013. In recent weeks, CBRE have been involved in the sale to an Irish institution of 100-101 Grafton Street, a unit let to AIB bank for a price reported to be in excess of €50 million and have also been involved in the sale of 17 Mary Street to State Street. Natalie Brennan, Senior Director in the investment team at CBRE in Dublin partly attributing the strong appetite demonstrated for both of these assets to their long-term rental growth potential.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.