Manhattan’s iconic Fifth Avenue stretch that extends about 11 blocks south of Central Park has won back the title as the world’s most expensive shopping corridor when it comes to rents.
The strip between 49th and 60th streets, home to luxury flagships and famed attractions including Rockefeller Center and St. Patrick’s Cathedral, posted a 14% increase in average rent from its pre-pandemic level to $2,000 per square foot. That moved "Upper Fifth Avenue" up one spot back to the No. 1 position, according to Cushman & Wakefield’s “Main Streets Across the World 2022” study, which tracks top retail districts across 92 cities and ranks the most expensive streets by prime rental value.
The global brokerage firm said this is the first time in three years that it conducted the otherwise annual study. New York, which had claimed the top spot before, unseated the previous title holder Hong Kong, which was ranked No. 1 in 2019. Rents in the shopping area known as Tsim Sha Tsui have plunged 41% since before the pandemic to $1,436, but that was still enough for it to rank as the second-priciest street in the world.
Milan’s Via Montenapoleone, London’s New Bond Street and the Avenues des Champs Elysees in Paris rounded out the top five spots, according to the study. The top five corridors also were the only five areas in the world where average rents topped $1,000 per square foot.
“Almost three years after the onset of the global pandemic, the retail industry has been through one [of] the biggest stress tests imaginable, but best-in-class real estate has remained robust — and even emerged stronger in some markets,” Cushman said.
While the pandemic-led store closings and other disruptions have initially hurt retail properties across the world, the pace of recovery has been uneven. Even though rents across global prime retail destinations declined 13% on average during the depth of the pandemic, they have since rebounded to just 6% below pre-pandemic levels, according to the study.
The Americas region, led by a 25% jump in the United States, has posted rents that are 15% higher than pre-pandemic levels. In contrast, rents in Asia, hurt by stricter pandemic policies and international border closures, posted rent drops of 12% during the same time while Europe’s rents have dropped 8%.
The U.S. recovery is “in part the result of supportive fiscal policies but also the result of domestic migration patterns that have driven strong population growth in markets such as Houston and Austin — and as a result, an influx of buying power into those markets,” according to the report.
As the U.S. dollar has appreciated against a basket of other currencies, it’s benefited corridors such as Upper Fifth Avenue as competing top-tier markets overseas contend with weaker local currencies, Cushman said.
Among other bright spots in the United States, while its rent level is only one-tenth of Manhattan’s Fifth Avenue, Houston’s River Oaks District luxury shopping mall area shined as the corridor that posted the fastest rent growth since pre-pandemic levels, with rents more than doubling to $200 per square foot, according to the report.
Despite Cushman’s ranking, Fifth Avenue is still seeking to recover from its own COVID damages. The area faces challenges including the lack of a full return by international tourists who are critical to business, as well as New York’s slow return-to-office rate, brokers and landlords have said.
As part of a move to jolt businesses in midtown Manhattan, Fifth Avenue, which attracts throngs of holiday revelers to the annual Rockefeller Center Christmas tree and luxury shops’ holiday window displays, will go car free for the first time in half a century, the city announced this week.