Rents spike in prime shopping districts

Smaller business being hammered by rising rents.

CBRE Group Inc. noted there’s a limited supply of good spots and rents are super high in major shopping districts. Joe Lin, Hong Kong-based senior director for retail services at CBG, said it’s natural that restaurants and some retailers would find these fringe areas with an equally hip, high-spending crowd more attractive.

Shops in Causeway Bay are priced at an average of US$2,630 per square foot a year, the highest in the world, said broker Cushman & Wakefield Inc. That’s a yearly rent of US$1.32 million for a shop with a size of 500 square feet.

Retailers at Tsim Sha Tsui pay US$1,547 a square foot annually. Retail rents in the Central Business District are US$1,856 a year. One retailer noted that business is good if you’re already an existing operator in Central, but the rent is just crazy if you want to open another new store.

Small business in Sheung Wan, Sai Ying Pun and Kennedy Town and mom-and-pop stores also are being hammered by high rents.

Monthly rents for ground-level shops in the up-and-coming fringe areas have risen multiple times in the past five years to about HK$40 to HK$60 a square foot, said broker Colliers International. At upwards of HK$720 a year per square foot, they remain well below those in top shopping districts such as Causeway Bay.