Bonifacio High Street still among highest in rental rates worldwide

MANILA, Philippines — Bonifacio High Street in Taguig City retained its rank as the world’s 41st most expensive shopping street as rental rates remained resilient amid the pandemic, according to a report by Cushman & Wakefield.

In its Main Streets Across the World report, Cushman & Wakefield said retail rents in Bonifacio High Street remained at $46 per square feet per year.

It said that on average, prime retail rents in the Philippines remained at pre-pandemic levels despite the early market challenges.

“The retail situation of the Philippines at the height of the pandemic mirrors that of the many markets wherein many businesses were put at a standstill, where the allowed establishments to open were limited to essentials,”said Claro Cordero, Cushman & Wakefield Philippines director and head of Research, Consulting & Advisory Services.

“As mobility restrictions have been lifted, the high-end retail segment is seen to gain lost grounds in the medium-term, while full recovery of the mid-end retail segment will take a while due to challenges in the growth of consumer spending attributable to the escalating prices of goods and services,”he said.

Cordero said that demand for luxury, on the other hand, would remain on a growth path as affluent shoppers are undaunted with escalating prices.

“In the Philippines, the decoupling of the high-end/luxury and mid-end segment post-pandemic will be largely due to the ability of the luxury brand operators to embrace changes in consumer preference and shopping habits,”Cordero said.

He explained that in the past two years, new retail space completions in the mid-end segment remained lackluster as developers reassess expansion strategies in favor of more resilient asset classes.

“As retail space vacancies in the mid-end segment were still observed to be high compared with pre-pandemic averages, the high-end retail segment has since recovered due to improvement in mall features (such as higher ceiling, better air circulation that mimic ‘outdoor’ spaces) that enhance experiential shopping,”Cordero said.

He pointed out that while the growth of ecommerce has decelerated in most markets, the Philippines’ retail shopping industry, especially the high-end segment, remains closely tied with this growth.

“To date, some of the successful brands that have ridden the tide have implemented omnichannel marketing strategies that allowed them to better serve and understand their customers on a new level and meet them where they are,”Cordero said.

According to the Cushman & Wakefield report, rents across global prime retail destinations declined by 13 percent on average at the peak of the Covid-19 pandemic but have subsequently rebounded to just six percent  below pre-pandemic levels.

It added that global rental growth over the past year averaged two percent but has varied tremendously.

“APAC was the most impacted region during the pandemic period with rents falling 17 percent on average, mainly due to border closures affecting prime international tourist destinations,” it said.

In Europe, Middle East, and Africa (EMEA) rental declines averaged by 11 percent, while the drop for the Americas was just seven percent, due to supportive fiscal policies and domestic migration patterns boosting buying power.

Cushman & Wakefield said that since the pandemic rockbottom, global retail market rents have rebounded by approximately 50 percent.

“Much of that improvement occurred through 2021 and into early 2022 before global economic headwinds started to negatively impact markets over the past six months,”it said.

Based on the report, New York’s Fifth Avenue has reclaimed its position as the world’s most expensive retail street, with average rents of $2,000 per square feet per year.

This was followed by Tsim Sha Tsui in Hong Kong at $1,436 per square feet per year, and Milan’s Via Montenapoleone at $1,380 per square feet per year.