Real Estate

Rani Molla is a Bloomberg Gadfly columnist using data visualizations to cover corporations and markets. She previously worked for the Wall Street Journal.

Some of the world's hottest shopping destinations, sometimes referred to as "high streets," are losing elevation.

Popular retail real estate locales, from New York City's Fifth Avenue to Hong Kong's Causeway Bay shopping districts, saw rents fall this year, according to a new report by real-estate services firm Cushman & Wakefield, as retailers have finally started to balk at high rents

Location, Location, Location
Some of the most expensive high street retail locations have seen their rents drop this year. Current rank:
Source: Cushman & Wakefield
Data for Q2 2016. List includes only top retail real estate location per country.

For the first time since the financial crisis, rent fell on Upper Fifth Avenue -- the most expensive retail property in the world -- from $3,500 per square foot in 2015 to $3,000 this year. Vacancy rates, meanwhile, jumped to 15.9 percent from 10 percent a year earlier.

Rent Reset
Of top retail real estate, New York's 5th Avenue and Hong Kong's Causeway Bay saw the greatest rent decline from 2015 to 2016, as retailers try to cut operating costs
Source: Cushman & Wakefield

Fashion-district flagships, once considered a traffic and advertising necessity, are losing their importance to retailers. It's not that they're unpopular. Rather, sales at these top locations haven't kept up with rent, and retailers are under extreme pressure to cut their operating expenses, according to Cushman & Wakefield retail research VP Garrick Brown.

Retailers can shave thousands of dollars per square foot from rent simply by relocating to nearby areas -- Cushman & Wakefield refers to these as "cool streets" rather than "high streets." For retailers in New York, that means lower Manhattan and Brooklyn may be smarter locations. 

Sales and earnings at North American department stores and specialty retailers are declining -- meaning retailers have to cut costs, even if that means lessening their presence in prime locations. 

Retail Retreat
Same store sales and margins have been declining at North American department stores
Source: Bloomberg Intelligence
On Sale
Trailing 12 month earnings per square foot are declining at North American specialty apparel stores
Source: Bloomberg Intelligence

These high-profile flagship stores function as brand advertisements and see substantial foot traffic, so they're not going to disappear en masse. However, with shopping increasingly moving online and a strong dollar eating into foreign purchasing power, retailers will get a lot choosier about their top real estate. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Rani Molla in New York at

To contact the editor responsible for this story:
Mark Gongloff at