Zurich's Bahnhofstrasse is still one of the most expensive in the world for renting store space, says a study released on Wednesday.This content was published on November 19, 2008 - 18:52
The study by Cushman & Wakefield, a global real estate firm, found average monthly rents on Zurich's prime shopping street stood at SFr 61,400 ($51,269) for a 100-square-metre space, the 12th highest overall.
"I'm not sure why the rent is so high," Markus Hünig, president of the Bahnhofstrasse Association, told swissinfo. "If one of the rental contracts ends and has to be renewed, then most of the time the rent goes up."
"It's not our aim to be in the top ten in terms of rental prices."
He added that big, international brands – like The Body Shop, Giorgio Armani and Tiffany & Co., among others – vie for space in an area that sits within easy reach of the country's busiest railway station. For those companies, it's a matter of prestige, he said.
"Of course we have a problem that some of the older businesses can no longer pay the rent that's being asked," said Hünig, who used to be a partner in a law firm located on the street. "This is one of the questions we have to deal with."
Paying to advertise
The study, called Main Streets Across the World, looked at the most popular shopping streets in 48 countries.
New York's Fifth Avenue topped the list as the most expensive in the world, with rent costing on average $130,000 a month. Causeway Bay and Central in Hong Kong, New York's Madison Avenue and the Champs Elysées in Paris rounded out the top five.
In Switzerland, Geneva's Rue du Rhône ranked as the country's second-most expensive. Shopkeepers there must pay on average SFr30,700 a month to display their wares. That puts it at 58th in the world, down from 50th last year, the study found.
Bern's busy Marktgasse, with its arcades and cobblestones, is Switzerland's third most expensive for retail rents. Stores there pay on average SFr23,000 a month, which ranks 78th overall. The Freiestrasse in Basel comes in at 87th in the world, with rents of SFr21,500 a month.
Despite the economic downturn, rents are increasing – sometimes dramatically – for shopkeepers along the world's most popular shopping streets. Rents on the Rue du Rhône leapt 14.3 per cent over last year. New York's Fifth Avenue saw prices increase by as much as 23 per cent.
John Strachan, head of global retail at Cushman & Wakefield and contributor to the report, said on the company's website that demand for prime retail space often has to do more with advertising than actual sales.
"For luxury and high-end retailers, a presence on the most prestigious streets is deemed essential for brand positioning, sometimes regardless of how profitable a store might be. A brand profile helps to drive revenue through other channels, such as the internet."
Edith Zweifel, a media representative from Swiss Tourism, said the more places like Zurich's Bahnhofstrasse grow in prestige the more they become tourist attractions in their own right.
The city centre location of the country's main shopping streets adds enormously to their popularity, she said. That in turn spurs demand for businesses to set up in those areas.
"It's all so easily accessible here," she said, adding that studies have estimated that roughly 25 per cent of all overnight stays in Switzerland in 2007 were business travellers, who tend to shop.
"The biggest airport in the country, in Zurich, is 15 kilometres from the Bahnhofstrasse. If someone has the money and wants to go shopping for clothes, shoes, bags, jewellery, they can be in one of the most well known places to shop in Switzerland in ten minutes by train."
swissinfo, Tim Neville
According to Cushman & Wakefield, authors of the report, many retail districts are "proving largely resilient" to the recent economic doldrums.
The annual study, the 23rd conducted by the firm, looked at 236 streets in 48 countries and found that 94 per cent of all rents have either increased or remained stable since the last report.
Some of the most expensive cities have more than one street in the top ten.
In addition to Zurich, the cities at the top of the list were New York, Hong Kong, Paris, Milan, Dublin, London and Tokyo.
The city with the most dramatic one-year increase for retail space is in India. Mumbai's Colaba Causeway had rents soar 182 per cent to $269 a square foot per year.