More and more shops remain empty in second-tier shopping streets in Hong Kong. That's as would-be tenants have been unable to meet demands for higher rents.
This is Percival Street in Causeway Bay – just a stone's throw away from Times Square and Russell Street, the priciest shopping area in the world. Percival Street isn't like what it used to be. More street-level stores here are now coming up vacant, like this one.
The situation is the same here in adjacent Foo Ming Street. About half of the street's 10 shop like this one are vacant or leased on short-term contracts.
Pak Sha Road and Lee Garden Road are both within striking distance of Times Square and they face the same vacancy issue. Property consultancy CBRE says the problem is most acute here in Causeway Bay, where rents have risen sharply in the past few years. Vacancy rates have picked up since the fourth quarter of 20-13, and it's particularly serious along the second-tier shopping streets.
Curiously, the top-tier shopping streets like here where Times Square is located don’t have the same vacancy problems. Why?
Because it's the luxury brands that want the most prime space of all. And they're the only ones that can afford it.
There used to be a day when those luxury brands would rent shops in the second-tier streets I just showed you, but that was a time when retail sales were much stouter.
Now that retail sales aren't as robust as before, the luxury brands have slowed expansion and are locating themselves only in the most prime shop spaces in Times Square.
The empty spaces along the second-tier shopping streets may not stay vacant for long, however. Some landlords have reportedly become more willing to accept lower rents. That's because as more shops stand empty, tenants start to get the better end of the stick and gain strong bargaining power. CBRE expects rents in the second-tier shopping streets to drop more than 10 percent this year while the costs of top-tier locations will stay firm.
