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.
Anthony 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 of stores.
Robert Taubman, chairman and chief executive officer of Taubman Centers Inc., told Bloomberg, "There is the sense that demand is improving quickly."
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?