What's the number one rule in real estate? Location, location, location. So, what's the going rate of the best location in all of the retail world?
According to data from brokerage Cushman & Wakefield, the answer is New York City's Fifth Avenue corridor. At $3,500 per square foot, the famous Upper East Side street ranks above internationally famous locations like Paris' Avenue des Champs-Élysées, London's New Bond Street and Tokyo's Ginza neighborhood. Fifth Avenue shops are now paying about 50 percent more than the second most expensive retail location in the world: Hong Kong's Causeway Bay.
The price of real estate on Fifth Avenue rose by 3.6 percent since 2014, making it one of the fastest-growing markets in the U.S. The Cushman & Wakefield report also found that San Francisco is experiencing serious activity, with retail vacancies falling to a record-low of 1.1 percent. Rents in the infamously expensive city have risen a predictable 13 percent as well.
"The Americas region is expected to sustain a positive trajectory going forward into 2016, bolstered by a steady consumer sector benefiting from a material reduction in energy costs and stable employment expectations, especially in the U.S.," Gene Speigelman, vice chairman and head of retail services for North America at Cushman & Wakefield, said in a statement. "Retailers will continue to add physical stores to support their expansion plans, while at the same time optimizing their footprint to respond to the ongoing evolution of 'clicks and bricks.' Further, international luxury brands will continue to dominate the high street, providing a boost to the key destination cities with high exposure from tourism and strong footfall."
While retailers might be on the path to expansion, only a select few will be able to afford real estate on the Fifth Avenues of the world, making effective behind-the-scenes logistics more of a necessity than ever in a high-cost retail rent world.