Prime Retail Space Getting More Pricey
The cost to rent prime space in some of the most prestigious
retail districts in the U.S. is going up and that’s a good thing, according
to the head of leasing in North America for the CB Richard Ellis Group.
Buono, executive managing director for retail services at the broker, said
rents in places such as Rodeo Drive in Beverly Hills, Michigan Avenue in Chicago
and Fifth Avenue in New York are up as much as 15 percent since the end of
last year. Those increases are having a ripple effect and helping to bolster
rents in secondary markets such as Miami and Seattle. Eventually, he told Bloomberg
News, that will spread to retail space in the suburbs.
“We’re starting to see some stabilization,” he said. “It’s
the beginning of a slow march.”
A survey of retailers by CB Richard Ellis
found that 92 percent are looking to add stores next year. Leasing activity
through the end of April was 15 percent to 20 percent higher than the same
period in 2009, according to Mr. Buono. Lower rents helped explained some of
the increased activity as vacancies were created by chains closing large numbers
Robert Taubman, chairman and chief executive officer of Taubman Centers
Inc., told Bloomberg, “There is the sense that demand is improving
Discussion Questions: In the big scheme of things, are higher
rents for space a positive, negative or neutral sign for the retailing business?
Do you see retailers taking a different approach to negotiating leases than
perhaps they have in the past?