According to new research from CBRE Group, New York City remains the world's most expensive shopping destination as retailers concentrate on the major fashion capitals, but rents have leveled off in all global regions in the third quarter of 2011, as the Eurozone crisis continues to affect consumer trust. real estate agent
"Despite concerns about consumer trust, retailers continued to grow their store networks to gain market share in the third quarter," said Anthony Buono, CBRE Executive Managing Director of Retail Services. "While retailers in the United States and Western Europe have remained cautious, Asia has seen substantial levels of occupier demand in destinations such as Singapore, China, and India."
Fifth Avenue in New York remains the world's most expensive retail destination, with rents holding steady at US$1,900 per square foot per year. In comparison to the previous quarter, the CBRE survey of the world's most expensive global shopping cities showed no improvement in Q3 2011. Hong Kong (US$1,695 sq. ft. per year) remained the second most expensive retail market, with annual rents up 52.8 percent in 2011.
Sydney (US$1,224 sq. ft. per annum) remained third in the rankings, while London (US$961 sq. ft. per annum) rose one spot to fourth from Q2 2011, thanks to increased competition for prime locations in the city's West End, which resulted in a 5.6 percent annual rental rise in Q3 2011.
In Q3 2011, total retail rents were largely flat quarter over quarter (-0.6 percent), with rents falling 2.0 percent in the Americas and remaining unchanged in the Asia Pacific and Europe, Middle East, and Africa (EMEA) regions. As retailers take a more cautious approach to growth, this reflects a major decline from earlier in the year.
"Retailers continue to grow their store networks despite the unpredictable economic outlook," said Ray Torto, CBRE's Global Chief Economist. "While prime locations in Europe's largest cities are also attracting a high level of occupier demand, as consumers increasingly target major destinations with the widest range of retailers, emerging markets, especially Asia, offer attractive growth opportunities. Retailers, on the other hand, have been more cautious in their expansion, resulting in flat rental growth globally in the third quarter, a significant slowdown from earlier in the year."
Despite economic headwinds, global hotel investors remain steady in Q3.
Despite hiccups in the global marketplace, debt and equity dynamics stayed stable in the third quarter, according to STR Analytics' Hotel Investors Gauge.
"Despite the fact that the national and global economies have been on a rollercoaster ride recently, hotel investment remains high," said Steve Hennis, director of STR Analytics. "With low supply growth, demand at an all-time high, and interest rates at very low spreads, the hotel investment climate is extremely appealing."
The Hotel Investors Gauge also revealed the following core findings:
The average leveraged return target for both buyers and developers is still about 20%.
Lenders are willing to lend money on favorable terms. Interest rates were 350 basis points above the London Interbank Offered Rate, with loan-to-value ratios averaging 68 percent.
Investors have a love-hate relationship with New York. The top five most attractive markets for investors are New York, Washington, D.C., Boston, Miami, and Los Angeles. On the other hand, investors are least likely to consider investing in Detroit, St. Louis, New York, Tampa-St. Petersburg, and Orlando.
Until at least 2014, the outlook is positive. More than 90% of respondents believe the next market peak would occur after 2013, with more than a third of those polled anticipating it to happen in 2016.