Retail rents rising faster in Edinburgh than any other city in the UK outside London

Cushman & Wakefield’s ‘Main Streets Across the World’ survey shows rents rose by a healthy 5.3 per cent in the Scottish capital’s busiest shopping thoroughfare to £200 per sq ft for Zone A retail space.

Glasgow’s Buchanan Street reported a smaller rise of 2 per cent in rents to £260 per sq ft but still managed to retain its title of the most expensive street outside the British capital this year.

Stuart Moncur, Partner, UK for Cushman & Wakefield, said: “Princes Street has continued to perform strongly over the past 12 months or so, partly due to the general improvement in consumer confidence across the UK which in turn is leading to improvements in retailer sales. However, specifically for Edinburgh, the completion of the tram works last year has assisted significantly with the performance of many retailers on not only Princes Street, but across the city centre. The disruption due to the laying of the tracks resulted in many retailers holding back on committing to new stores on Princes Street, however the thoroughfare is a much more appealing proposition to them now. With few units currently available within prime spots, rents are being pushed up.

“We are also seeing a move towards the East End of Princes Street thanks to the arrival of heavyweights like Apple, Barclay’s and the larger H&M store. With retailers from the St James Shopping Centre jostling to find other stores in advance of the redevelopment work there, it is all good news for landlords.”

There is an equally positive outlook for Glasgow’s Buchanan Street, which is continuing to consolidate its position as the destination of choice for retailers opening flagship stores and brands entering the Scottish market for the first time. New arrivals this year include American designer Michael Kors and Hawes & Curtis.

Mr Moncur added: “We are now seeing transactions generating rents up to and potentially beyond £270 per sq ft Zone A which is an all-time high for Buchanan Street. Furthermore, we anticipate the demand will continue to drive rents up as the predicted delay to the Buchanan Galleries extension is forcing many retailers to focus their attention on opportunities along Buchanan Street.”

However, the continued success of Princes Street and Buchanan Street is dwarfed by that of London where New Bond Street saw a 12% rise to an eye-watering £1400 per sq ft for Zone A.

The ‘Main Streets Across the World’ report tracks over 500 of the top retail streets around the globe, ranking them by their prime rental value utilising Cushman & Wakefield’s proprietary data. The 27th edition of the report shows that rents have risen in 35 per cent of streets around the world – despite the increased global uncertainty experienced over the past 12 months.

Paris’ Avenue des Champs Élysées remains the most expensive retail location in Europe, with rents at €13,255 sq.m/yr, just ahead of New Bond Street in London, which commands an average price of €12,762 sq.m/yr. From a global perspective, the two streets are third and fourth, respectively, behind Causeway Bay in Hong Kong (€23,178 sq.m/yr) and New York’s Upper 5th Avenue (€33,812 sq.m/yr).

The top 10 European retail locations (top one per city) is below.

Justin Taylor, Head of EMEA Retail at Cushman & Wakefield, said: “Improving employment prospects, rising real wages and healthier consumer confidence in advanced economies are set to offer more positive momentum for the retail sector.

“From an EMEA perspective, despite any economic and political uncertainties in certain countries, the retail market is expected to see further improvements. Indeed, a strong retail sales growth forecast, robust occupier demand and a lack of supply in many locations mean rents will keep rising in the most popular high streets. Tight availability is shaping the retail landscape, pushing the geographic boundaries of well-established high street markets outwards.”

France has the highest number of expensive high streets within Europe, all of which are located in Paris. While prime rents on Avenue des Champs Élysées remained unchanged, rents across the majority of other Parisian high streets recorded positive growth in the year to June 2015. This was most notable on Place Vendôme/Rue de la Paix (20 per cent) and Rue Saint-Honoré (20 per cent).

Strongest rental growth this year in Europe was recorded in Dublin’s Grafton Street and Covent Garden in London, as well as in top high streets in Milan and Rome. However, high streets in Russia and Ukraine experienced sharp falls linked to the geopolitical conflict in the region that yielded slowdowns in economic growth and consumer spending.

Prime high streets in Stockholm and other key regional cities in Sweden continue to outperform, but the lack of suitable space is pushing more retailers to assess opportunities on streets adjacent to the main thoroughfares. There is a better availability of space in secondary and in non-central high streets, but demand is still selective in these locations.

Elsewhere, although Turkey reported the highest rental growth in EMEA in 2014 – most notably in Istanbul on Caddesi at 24.4 per cent, Istiklal Street at 27.3 per cent and Abdi Ipecki 20.9 per cent – over the 12 months to June 2015, the majority of high street locations in Istanbul, Ankara and Izmir saw little to no rental growth. However, occupier markets are performing solidly, with healthy demand from a broad range of local and international retailers whom are mainly targeting prime high street shops and well-located shopping centres in key cities.