High Demand and Scarcity of Spaces Drive High Street Rents Upwards in Lisbon and Porto
High demand and scarcity of spaces available in Lisbon and Porto are increasing rents in high street retail. The conclusions are from a recent study done by CBRE which refers that prime rents in stores in Chiado (Rua Garrett) and Rua Augusta rose 5% and 21%, respectively. In Porto, prime rents in Rua de Santa Catarina registered an increase of 29%.
According to the “Property Perspective” study, from CBRE, in 2016, retail prime rents in Chiado (Rua Garrett), in Lisbon, stood at 105€/sq m/month, a 55% increase regarding the previous year. In Avenida da Liberdade, prime rents remained stable at 100€/sq m/month, while Rua Augusta registered a 21% increase to 85€/sq m/month.
In Porto, prime rents in Rua de Santa Catarina, where the high street retails is more established, registered an increase of 21%, to 85€/sq m/month.
The high street retail maintained a strong dynamics over 2016, derived not only from the continued high tourism flow, but also from an increase in private consumption. In Lisbon, new food and beverage concepts continue to appear throughout the historic centre of the city, namely in the prime high street axis of Rua Augusta and Chiado, as well as Príncipe Real and the river front axis, where tourism flow is stronger. Regarding Porto, the city is also witnessing a very positive phase, with new openings in the main high street retail areas.
Throughout the year, 17 new stores opened in the main streets of Lisbon. We point out the opening, for the first time in Portugal, of four new stores, three luxury brands in Avenida da Liberdade – Bvlgari (430 sq m), Versace (430 sq m), Armani Exchange (490 sq m) and the fashion brand, Brandy Melville (300 sq m) in Chiado.
In Porto, CBRE registered the opening of 19 new stores, including the New Balance store in Rua de Santa Catarina (786 sq m) and the Hard Rock Café near Avenida dos Aliados (1,450 sq m). At the same time, and keeping in line with the continued trend, several food and beverage units opened in Rua das Flores, Largo de São Domingos and in Rua Mouzinho da Silveira.
High street retail prime rents, Q4 2016
Prime rents also increase in retail parks and outlets
Prime shopping centres in the country currently show a residual or strategic vacancy, whilst secondary shopping centres continue to slowly recover and to reduce the level of rent discounts. Prime rents remained unchanged over the year in Lisbon and Porto shopping centres, standing at 95€/sq m/month at the end of 2016, 12% above the market peak, in 2007.
On the other hand, the year of 2016 has confirmed the recovery of a number of retail parks, with the comeback of traditional occupiers of this format, as well as the arrival of new operators, pushing up the rental values, which increased 6% year-on-year, but that are still 10% below the market peak.
In outlets, prime rent have also increased throughout 2016, standing at 25€/sq m/month.