By Garrick Brown, Vice President, Retail Research for the Americas
For weeks I had planned to make CW Cannes, MAPICEurope the focal point of this week’s Retail Newsline. I was going to do that for all the right reasons. MAPIC is this week. If you don’t know what MAPIC is, it’s the biggest retail real estate trade show in Europe. MAPIC is held every year at roughly the same time in Cannes and officially began today. Not only is this Europe’s biggest annual retail real estate trade show, it is arguably the premier global retail event in terms of luxury and high street retail.
Unfortunately, the horrible crime that was perpetrated last Friday in Paris means that I am focusing on Europe now for obvious reasons beyond what I had intended. Let’s start with the bad news first.
If you look it up in Wikipedia, the definition of the Black Swan Theory or Black Swan Events is “a metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight.”
It’s too soon to tell if the despicable events that transpired in Paris last Friday will prove to be a black swan event. The only thing I can tell you for sure at this point is that the metaphor itself… the image of a black swan, is far too elegant to describe what happened. But in terms of what the eventual impact on the global economy or just the retail sector… it’s hard to get a reading at this point.
There is a good chance that this won’t prove to be a black swan event simply because, by definition, a black swan event comes as a surprise. The sad truth is that last Friday’s terrorist attack was certainly shocking and worthy of a number of adjectives that I am not allowed to use here. But was it truly surprising? The sad truth is that what happened in Paris last Friday isn’t something that we haven’t already seen again and again to varying sickening degrees in recent years.
But what does it mean for the big picture?
For the most part, global stock markets have pretty much shrugged it off… so far. European travel and tourism related companies would be the big exception and it’s no surprise that they took a hit.
My phone has been ringing off the hook the last few days with people wondering how to read the events of the past few days. I’ve been approached by a couple of reporters wondering if this might result in a boost to U.S. travel (despite a strong dollar) with global travelers hesitant to visit Europe. Maybe. Maybe not. I’ve had a few acquisitions guys call me wondering if I thought that this might mean more European investors chasing properties here as they seek the “relative” security of the United States. Maybe. Maybe not. And I have gotten a few queries from landlords wondering how this might impact European luxury retailers—could it cause them to slow overall growth, could it cause them to focus growth ahead in Asia, North and South America? Again and again, the only answer I have right now is maybe. Maybe not.
The fact is that it is just too soon to know. The events of the next few weeks will be critical in determining that and we will be watching events closely. But the truth is that it is just far too soon to tell.
So let’s move on to something more positive. Let’s get back to MAPIC, which is taking place as we speak in Cannes. The good news is that the show has gone on and the reports I am getting sound like attendance hasn’t been too negatively impacted, though one has to assume there has been some impact.
In speaking to a few of our people on the ground there, I am glad to say that I am hearing that the mood is not as somber as one might expect. As one of our brokers shared with me earlier today, “there is a sense of resolve and community like what we saw back home after 9/11 and a deep sense of appreciation for all of us who traveled here from abroad.”
To correspond with the start of MAPIC today, we released the 27th annual edition of our global retail flagship report, Main Streets Across the World. This report tracks over 500 of the top retail streets around the globe, ranking the most expensive in each country by their prime rental value and it also shares our analysis of what is happening when it comes to prime, urban high street retail from a global perspective that you just can’t find anywhere else.
You can access this report by clicking here.
A couple of key findings from this year’s report; New York’s Upper 5th Avenue remains the most expensive retail street in the world with rents average to an average of $3,500 per square foot (annually) over the past year. It’s nearly 50% more expensive than Causeway Bay in Hong Kong, the world’s second most expensive retail location. Despite the heightened global uncertainty of the past year, high street retail rents have risen in 35% of the locations that we track.
Prime urban high street retail rents are on the rise here in the United States (look to page 16 of Main Streets Across the World to check out our data on the Americas) but they are also climbing when it comes to shopping center space, whether we are talking about urban or suburban. We also created a companion piece that we are distributing at MAPIC covering U.S. shopping center trends.
Click here to access our USA Shopping Centers Marketbeat Report MAPIC Supplemental.
Also, in the next couple of weeks we will be releasing a new 2016 U.S. Shopping Center Forecast Report that does a deep dive on retail trends within the shopping center world. This report breaks down statistics from more than 60 major U.S. markets as they pertain to lifestyle, community/neighborhood, power/regional and unanchored strip centers across the country. If you are on the mailing list for the Newsline you will be getting this as soon as it is completed. In the meantime, be safe and have a great week.
This post is commentary from the latest weekly edition of our Cushman & Wakefield Retail Newsline, which you can subscribe to for free by e-mailing firstname.lastname@example.org.
Garrick joined Cushman & Wakefield (formerly DTZ / Cassidy Turley) in October 2010. He serves as Vice President of Retail Research for the Americas. He speaks frequently at industry events and has been a keynote speaker at symposiums, conferences and market forecasting events for groups like the Appraisal Institute, Urban Land Institute, CREW, ICSC and PRSM. He is also a member of Lambda Alpha International, an invitation-only land use society for those who are involved in the ownership, management, regulation and conservation of land, but also those who are involved in its development, redevelopment and preservation.