C&W: world’s most expensive retail is in Via Montenapoleone
Milan shopping superstar: Via Montenapoleone in Italy’s most famous fashion district has overtaken New York’s Upper 5th Avenue to be crowned the world’s most expensive retail destination based on headline rents, according to Cushman & Wakefield research.
It is the first time ever that a European street has topped the global rankings. Rents in via Montenapoleone have increased by a third in the past two years.
In a major shake-up, London’s New Bond Street also regained its top-three status, leapfrogging Tsim Sha Tsui in Hong Kong to take third place. With 10% year-on-year (YOY) rental growth, Paris’s Avenue des Champs Élysées retained fifth position, although Tokyo’s Ginza district narrowed the gap with a 25% YOY increase,
C&W’s ‘Main Streets Across the World|’ report, now in its 34th edition, focuses on headline rents in 138 best-in-class retail locations across the world, with a global index ranking the most expensive destination in each market. The report found rents increased in 79 of the 138 locations tracked, declining in just 19, with global average rental increase of 4.4%.
“These globally iconic locations are characterised by intense competition for space and extremely limited supply, even in challenging retail market conditions,” said Robert Travers, head of EMEA retail, Cushman & Wakefield. “Brands, from luxury to mass market, are doubling down on their physical stores in the top locations as competition for consumer attention drives the need for a superior shopping experience and product showcase.“
While e-commerce plays a role in an omni-channel strategy, “it is the physical embodiment of the brand that customers connect with,” Travers said. As a result, vacancy rates remain exceptionally tight which translates into the rents that retailers are willing to pay to secure and retain their space.”
Long synonymous with fashion and luxury, Via Montenapoleone has steadily climbed the rankings in recent years, reaching second for the first time in 2023. Rents rose 11% to $2,047 per sq ft in the past 12 months, whereas rents on Upper 5th Avenue ($2,000) remained flat for a second consecutive year. Alongside continuing strong retailer demand amid constrained supply, Via Montenapoleone also benefitted from the euro’s appreciation against the US dollar.
In the US, Miami’s Design District led rental growth at over 66% YOY and 150% over the past four years, while conditions were more subdued in New York, San Francisco and Washington DC where rents were flat.
In India, 100 Feet Road Indiranagar, Bangalore, led Asia’s rental growth at 32% YOY, while Japan surprised by defying weak growth conditions. After four stable years, rents moved higher in 2024, led by Ginza at 25% YOY, while Osaka’s Midosuji recorded 9% growth.
According to C&W, prime retail destinations have mostly successfully weathered the storm precipitated by interest rate hikes to curb inflation in 2022 and 2023, which led to a rapid increase in the cost of living, weak consumer sentiment and sluggish economic growth. Retail now stands to benefit from the gathering pace of interest rate cuts, economic recovery, easing cost of living pressures, and real wage increases.
“Increased discretionary spending among consumers will further boost the performance of prime retail destinations,” said Dominic Brown, head of international research, Cushman & Wakefield. How quicky and strongly that feeds through into rental growth at a market level will vary due to local nuances and market dynamics. Performance at the very top end underlines that the strength of ‘prime’ continues to rise and we expect that to continue as conditions improve.”
