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Dorota Dyman & Associates

Michael Raven
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Dorota Dyman & Associates Real Estate Rents Escalate Along Paris's Champs Élysées

Rents are heating up on one of Paris's haute avenues.

The cost of retail space along Avenue des Champs Élysées is rising as foreign tourists pour into France's capital ready to shop, European economies show glimmers of a recovery and luxury brands increasingly seek storefronts on the street.

Annual rents along the avenue, which connects the Arc de Triomphe with the Place de la Concorde, have surged 38.5% year over year to an average €13,255 ($17,770) a square meter, according to consultancy Cushman & Wakefield.

That is the highest rent increase along any of the 10 most-expensive retail locations in the world over the 12 months to the end of June, the period Cushman studied, and cements the boulevard as the third most-expensive street for retail space after Hong Kong's Causeway Bay and New York's Fifth Avenue. Rents in Causeway Bay rose 14.7% year on year to the equivalent of €24,983 per square meter and Fifth Avenue rents were flat at €20,702 per square meter.

In Europe, Champs Élysées rent far exceeds that of London's New Bond Street, where retail space fetches €8,666 a square meter.

"I'm not sure it will go much higher than this," says Christian Dubois, managing director of retail at Cushman & Wakefield in Paris. "At the end of the day, I would be very surprised if rental values would exceed this next year."

Finding an average rent for retail space on the street is difficult, brokers and investors say, because there are only a handful of deals completed each year as a result of a limited amount of space along the avenue.

One of the most eye-popping rents is MAC Cosmetics, EL -0.39% which opened a store on the avenue this year, paying €18,000 a square meter.

"Whether that's become the new market level or not is difficult to say, but for sure [the amount tenants are prepared to pay] has been growing," says Steve Cowen, managing director of transactions at Grosvenor Fund Management Europe.

Jeweler Tiffany TIF +1.11% & Co. plans to open a store there next year, joining brands including TAG Heuer, Marks & Spencer MKS.LN +0.29% and Banana Republic.

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