Fast fashion brand Topshop has halved the rent on its home on Queen’s Road in Hong Kong’s Central district, as rates for retail space in the city adjust to a new reality.
The UK-based retailer of youth-oriented apparel and accessories recently renewed the lease for its 12,000 square foot (1,100 square metre) store on one of Hong Kong’s busiest shopping streets at a rate of HK$1.5 million per month. The new deal gives Topshop another three years in the podium of the Asia Standard Tower for around HK$125 per square foot per month, after the fashion brand balked at the HK$3 million it had been paying for the same space since it signed its previous lease in 2013, according to an account in the Hong Kong Economic Times.
The cut rate rent deal is the latest sign of an adjustment in Hong Kong’s retail real estate scene, as landlords scramble to deal with fashion brands and luxury retailers scaling back their footprints in the face of declining sales and recalibrated expectations.
Back to the Old Ways on Queens Road
For Topshop’s location on Queen’s Road the new lease represents a return to leasing rates seen before a surge of fashion brand demand saw rents rise several years ago. The accessible design retailer moved into the shop in 2013 after after agreeing to pay double what the former tenant, local retail merchandiser Chinese Arts and Crafts, had been leasing the street corner space for.
Topshop’s rent cut follows a trend towards cost reduction by retailers in the city as other fashion brands surrender locations or downsize their stores.
Last month Swatch took over a pair of underground shops in the Central Building on Pedder Street in Central for around HK$350 per square foot per month, after Hugo Boss surrendered the shops mid-way through its lease. The German clothier had been paying more than double the rate that Swatch agreed to since signing its lease in 2014.
Luxury Brands Cut Rents or Surrender Their Space
The downturn is also having an impact across Hong Kong harbour in Mongkok where jewelry retailer Chow Tai Fook recently walked away from the underground shop it had been leasing for HK$3 million per month at 593-601 Nathan Road when the lease term expired.
The location on Kowloon’s prime shopping street is said to remain vacant as the landlord looks for a tenant to take over the space at a new rate of HK$1.5 million per month. Chow Tai Fook, which is controlled by New World Development’s Cheng family is said to have shut down four Mongkok shops over the past year.
On Russell Street in Hong Kong Island’s Causeway Bay, Prince Jewellery and Watch is reported to have renewed its lease of a 6-storey, 7,300 square foot shop for HK$1.8 million per month, about 38 percent less than it had been paying under its previous lease signed in 2013.