New drivers for the most expensive high streets: technology, food and … less retail
Causeway Bay replaced Fifth Avenue in New York in the top 10 most expensive retail streets in the world, according to the Cushman & Wakefield 2018 report. In the future, retail will likely form a smaller part of the overall tenant mixture, as restaurants or health and beauty facilities become more significant for many retail locations.
“There is still a significant appetite for premium retail sites globally, with the top retailers using stores as part of their customer experience strategy,” said Darren Yates, head of E.M.E.A. retail research, releasing the Cushman & Wakefield’s Main Streets Across The World 2018 report. Although the top handful of the priciest streets hasn’t altered much from 2017, the tenant profile and associated strategy are changing.
According to the survey of high-street retail rents, Causeway Bay has overtaken Fifth Avenue in New York for the top spot, with annual rents of US$ 24,606 per sq. m.
Calculations were set during the second quarter of this year. The report tracks 446 of the global top retail streets, ranking the most expensive street in each country by their prime rental value and enabling an analysis of trends in retail property performance.
What makes Causeway Bay’s performance on the list even more remarkable in achievement is the context of how the retail rent market flattened after three years of pressure from falling retail urban sales. London’s New Bond Street has third place on the list of the world’s most expensive retail space, as the most expensive European street.
For Asia-Pacific locations, Japan’s Ginza takes sixth place this year, Sydney’s Pitt Street Mall is seventh and Seoul’s Myeongdong district is eighth. Those places are the same as 2017, apart from Avenue des Champs Elysees in Paris overtaking Milan’s Via Montenapoleone into fourth place. Average global rents were broadly unchanged over the year to June, which reflects the fact that tenants are in the driving seat in many areas.
For the 30th edition of this world report, Cushman & Wafefield define several global trends behind this top expansive street ranking.
The most significant trend includes the continued growth of online and investment in store design. Whist technology is still a major disruptor in retailing, it is also enabling physical retail to compete, allowing retailers to accurately understand customers and to enhance the instore experience. Gucci has used Augmented Reality (AR) and Virtual Reality (VR) technology during its ‘Gucci Hallucination’ campaign last spring. Tommy Hilfiger has launched a first European shopping app ‘TommyNow’ which allows consumers to shop directly from the U.S. fashion brand’s Instagram feed. As robotics and artificial intelligence continues to revolutionise the world, Selfridges’ ‘Smartech’ Innovation hub has launched its first robot Coffee Barista called ‘YuMi’. This makes espressos for customers whilst dancing to background music in the Oxford Street store.
Another common trend in the annual survey is the continual rise of the food & beverage and health & beauty sectors, which have proved to be the most resistant in the face of online competition.
In United States, one trend allied to food & beverage is an emphasis on ‘healthy, fast and casual’. This has led to new restaurants and cafés, which offer nutritious ‘grab-and-go’ options or an eat-in service. Leisure continues to play a greater role and there are an increasing number of entertainment-driven lifestyle centers, including new concepts such as ‘Punch Bowl Social’. This casual dining and entertainment chain over 14 sites is based in Colorado, and known for a 2,700 sq. m millennial-friendly space packed with games and a menu of craft drinks and high-end comfort food.
From Retail to Social Spaces
In the future, retail will likely form a smaller part of the overall tenant mix, as non-retail uses such as restaurants, childcare facilities and fitness become significant retail locations. In fact, arguably, “we are now moving to a beyond retail phase”, said Cushman & Wakefield. Traditional retail is therefore being re-sized, re-invented and re-imagined. This trend is most apparent in the U.S.A. and the U.K., both of which have felt the force of retailer restructuring and shrinking store networks, as well as a downward readjustment of rents. Cushman & Wakefield said, “we are moving away from historic property sector definitions of retail, offices or residential.” A new vocabulary reflects customers’ missions and emotions. “We envisage these future mixed-use destinations being termed “Social Spaces””, explains Justin Taylor, Head of E.M.E.A.. From Retail to Social Spaces.