Sydney’s Pitt Street Mall remains as world’s 7th most expensive retail precinct

    • In APAC, Melbourne’s Bourke Street climbs to no. 5 and Brisbane’s Queen Street remains at no. 8
    • Hong Kong’s Causeway Bay has returned to the top of the global rankings, surpassing New York’s Upper 5th Avenue

Sydney, 15 November, 2018 – Sydney’s Pitt Street Mall has remained as the world’s 7th most expensive retail precinct by country, with rents remaining steady at $14,000 per sqm, according to rankings data from Cushman & Wakefield.

The annual ‘Main Streets across the World’ report, now in its 30th edition, tracks 441 of the top retail streets around the globe, ranking them by their prime rental value utilising Cushman & Wakefield’s proprietary data. It includes a list of the top 65 streets around the world based on one entry per country.

Pitt Street Mall has maintained its premium position with relatively flat rental growth and an ongoing uplift in online retail sales. Strong foot traffic and the increased demand for experiential shopping is supporting rents and most retailers continue to trade strongly within the precinct, particularly in the high-end luxury category.

Rankings for the Asia Pacific region shows Pitt Street was third most expensive behind Hong Kong’s Causeway Bay and Tokyo’s Ginza district, with Melbourne’s Bourke Street Mall climbing the APAC rankings from 6th to 5th at $7,000 per sqm. Brisbane’s Queen Street has held its position as the 8th most expensive in the APAC region, with retail rents averaging $4,500 per sqm.

Despite rents in some parts of the Australian market softening, most notably in CBD strip retail areas, rents in higher footfall locations such as Pitt Street and Bourke Street have held firm. Precincts such as Sydney’s George Street has recorded significant rental growth on the back of the forthcoming light rail project, with multiple new precincts under development.

Matt Hudson, National Director of Retail Leasing, Cushman & Wakefield Australia and New Zealand, said:

“Australia has firmly maintained its position as host to one of the world’s top ten most expensive retail streets, as rents in higher footfall locations such as Pitt and Bourke Street have remained steady over the past 12 months.”

“Encouragingly, demand for large stores has been strong.  There are various examples in CBD locations where multiple smaller units have been consolidated into a larger flagship store, in order to drive sales and improve staff efficiency.  A number of key locations are under development and currently seeking large scale flagship tenants, which is providing heightened competition for key shopping malls which do not offer the street or brand exposure of a flagship location.”

“In Sydney, there are also a minimum of 6 new retail precincts under development in and around the CBD, providing an opportunity for retailers to expand out of the mall spaces and establish a standalone presence, customising the in-store experience.”     

Michael Di Carlo, Director of Retail Leasing, Cushman & Wakefield Australia and New Zealand, added:

“While rents have remained at stable levels, we are seeing many retailers taking advantage of prime locations and developing brand and in-store experiences that are driving significant sales growth. This is particularly true for the high-end luxury retailers with space in or near Pitt Street and Collins Street.”

“Bourke Street Mall remains one of the highest foot traffic locations in the Melbourne CBD with circa 22 million visitors annually. This level of pedestrian traffic flow has remained consistent over the past 3 years and supported an influx of non-apparel retailers entering the mall, with the most recent additions including Michael Hill Jewellers, Pandora and Vodafone.”

“With continued growth in online sales and uncertainty in consumer confidence, there has been a general increase in retailer requests for break clauses and/or shorter leases. This is evident in the rise of small businesses opting for ‘try before you buy or lease’ options via pop up retail licenses. Landlord incentives such as capital contributions and rent free periods are also increasing across the city, however prime positions such as Bourke Street Mall and Paris end Collins Street remain low.”

Global rankings

A significant decline in New York rents has seen Upper 5th Avenue slip back to second place globally, with average rents at USD$2,250 psf/yr compared with $3,000 in the previous 12-month period. Despite a small

decline in average rents, Hong Kong’s Causeway Bay area takes top spot, with a figure of USD$2,671 psf/yr.London’s New Bond Street meanwhile is the most expensive European location, in third place globally, with

rents broadly flat year-on-year at USD$1,744 psf/yr, underlining the fact that luxury and high-end retailers still see the UK’s capital as a key retail destination. Elsewhere in the top 10, the Avenue des Champs Élysées is in fourth place (USD$1,519 psf/yr), with Milan’s ViaMontenapoleone in fifth position (USD$1,466 psf/yr). Tokyo’s Ginza is the highest-ranked Asian street, with rents on average costing (USD$1,219 psf/yr). Streets in emerging markets in Africa and Latin America account for most of the locations at the other end of the ranking, with rents as low as USD$20-30 psf/yr.