Pitt Street mall closing in on Fifth Avenue retail rents

As we look to what's ahead for 2012, Property Observer is republishing some of our most noteworthy stories of 2011.

You probably won’t bump into Carrie Bradshaw and her crew, but Sydney’s Pitt Street mall is rapidly moving up the ranks of the world’s most expensive shopping streets.

According to global research by Cushman & Wakefield, Pitt Street Mall retailers are paying 33% more per square metre than 12 months ago, with the street moving up five places to be the fourth most expensive shopping street in the world.

On average, retailers are paying $9,910 per square metre on Pitt Street mall (the pedestrianised block between Market and Kings streets in the Sydney CBD)– more than what you would pay on the far more famous Avenue des Champs Elysées in Paris ($9,890) and London’s Bond Street ($9,270)

Pitt Street Mall sits just behind Ginza Street in Tokyo ($10,400 per sqm) but is still a long way off the top two shopping strips – New York’s Fifth Avenue and Hong Kong’s Causeway Bay, which in retail renting terms exist in a class of their own. 

The world’s 10 most expensive shopping streets 2011

Source: Cushman & Wakefield (full ranking contained in the report) 

The most recent high-profile retail tenant on Pitt Street Mall was Spanish fashion retailer Zara, which opened its flagship three-level, 1,830-square-metre store in Westfield Sydney in April.

David Woolford, managing director of Cushman & Wakefield’s Australia division, says the Pitt Street Mall has undergone “a substantial transformation over the last 12 months with Westfield Sydney and the MidCity centre, both of which had been under redevelopment for several years, now effectively complete”.

“This has created a new super-prime precinct characterised by larger footprint stores and an influx of high-profile international brands.

“This has been confirmed with rents in the precinct consistently reaching $10,000 per square metre, with some as high as $13,000 per square metre. The emergence of international brands including Zara, Bottega Veneta, Christian Louboutin and Diane von Fürstenberg has legitimised this new super prime precinct, as these retailers may have been willing to pay premium rents to secure a flagship location in the Australian marketplace.”

Rent could rise even higher next year given that construction work is now almost complete.

Woolford says leases that were struck during the construction phase were impacted by lower turnover levels and reduced pedestrian thoroughfare at the time.

Despite a rental increase of 4.3%, London’s New Bond Street dropped two rankings, from fourth to sixth with Avenue des Champs-Elysées now the most expensive retail location in Europe, having registered a rental uplift of 5.3%, compared with a decrease of 9.5% last year.

Photograph by Giovanni Variottinelli