Retail rents in markets throughout the Americas now stand a whopping 15% above pre-pandemic ranges, in response to a brand new report from Cushman & Wakefield.
The agency’s Primary Streets Across the World report — Cushman’s first in three years — notes that rents throughout international prime retail locations slumped 13% from earlier than the pandemic to hit their lowest level on common, however have subsequently rebounded to take a seat 6% under pre-pandemic ranges. Lease progress has been extra wobbly in areas like Asia-Pacific, the place rents fell on common by 17% through the pandemic (and in cities like the Luohu district of Shenzhen in China, rents declined by 30% over the previous yr).
However within the US, which drove a lot of the Americas’ retail lease progress, rents are actually effectively above pre-pandemic ranges. In Houston’s River Oaks district, for instance, rents are up an eye-popping 90% over the past yr.
Total, international retail markets have recouped practically half their losses for the reason that apex of the pandemic, with the worldwide common lease sitting 6% under pre-COVID ranges. However “the tempo of restoration has diversified,” the report notes. “Arguably it has been strongest within the U.S., partly the results of supportive fiscal insurance policies but additionally the results of home migration patterns which have pushed sturdy inhabitants progress in markets resembling Houston and Austin—and in consequence, an inflow of shopping for energy into these markets.”
Cushman analysts additional observe that whereas a doubling of rents in these Texas cities “is each spectacular and considerably shocking, there are clear drivers; that these markets are on the much less costly finish of the U.S. value spectrum additionally had affect on the proportion progress determine, coming off a decrease base.”
Rents in luxurious retail corridors within the US are actually boasting a 25% premium to pre-COVID ranges, in response to the report. And whereas New York Metropolis’s Higher Fifth Avenue stays on high of the agency’s checklist of costliest retail markets, Rodeo Drive in Los Angeles follows behind within the #2 spot, adopted by San Francisco’s Union Sq., Las Vegas Boulevard in Sin Metropolis, Chicago’s North Michigan Avenue, and Boston’s Newbury Road.
Going ahead, Cushman says client confidence will stay key. Complete retails gross sales are up 33% within the US over pre-pandemic ranges as of midyear 2022, “the uncertainty of inflation and the stress on family spending—greater mortgage and lease, vitality and meals prices—have left customers anxious in regards to the subsequent 12 months,” the report notes. “The expectation and hope is that after there may be some indication that inflation is secure and abating, we are going to see client confidence bounce again. To an extent, there may be early—if considerably fragile—proof of this sentiment, as we see confidence in lots of markets bottoming, and in some circumstances, even starting to enhance.”
