A Cushman & Wakefield Research Publication
ISTANBUL HIGH STREETS Second Edition
November 2015
INTRODUCTION Cushman & Wakefield is delighted to provide the second edition of our in-depth Istanbul High Streets research brief. Following indicators and parameters for the three main streets are analysed on an annual basis to understand the high street retail market dynamics of Istanbul: retail stock, retail category splits by national/international and mass/luxury brands, annual take-up volumes, new retailer entries in the last twelve months and footfall. All results are evaluated in comparison with the previous year to illustrate general market trends and dynamics. The main high streets of Istanbul are characterized as followed: Istiklal Street on the European side with 272 stores is Istanbul’s busiest pedestrian street and home to many international and national retailers as well as museums, restaurants, theatres and consulates.
Total retail stock in these three main high streets is estimated to be around 190,000 sq.m in more than 1,000 stores. In terms of number of stores and presence of international brands, each of them can compete with other important high streets of Western Europe.
Nisantasi area on the European side with 395 stores comprises of four main streets, namely Rumeli, Tesvikiye, Vali Konagi and Abdi Ipekci. Nisantasi is the primary location for luxury brands, both national and international.
Other noteworthy high streets are Bahariye Street (Kadikoy) and Alemdag Street (Umraniye) on the Asian side, Ortabahce Street (Besiktas), Istasyon and Istanbul Streets (Bakirkoy) on the European side.
Bagdat Street on the Asian side with 375 stores hosts both luxury and high-end international brands as well as a full range of international and national mass retailers including several department stores. The street is also home to a large selection of restaurants, coffee and pastry shops.
Furthermore, transformation projects and urban renewals have already started to create alternative high streets in central areas with strong accessibility. Karakoy and Besiktas Carsi have emerged as new attraction points, especially for cafés and restaurants.
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A Cushman & Wakefield Research Publication
General Overview Total retail stock in the three main streets is estimated to be around 190,000 sq.m in more than 1,000 stores, having witnessed a slight decrease in both number of stores and size compared to the same period of 2014. Reason for the decrease in retail space is the on-going demolishment of buildings due to urban renewal, especially concentrated on Istiklal and Bagdat Streets. However, it is to be mentioned that these buildings are being rebuilt and that this is only a short-term temporary trend. In terms of changes in retailer category splits, Apparel, Fashion and Shoes & Bags still account for almost half of the total high street stock, followed by F&B and Banking, each representing 14% of total stock. While F&B and Banking recorded an increase in shares, Apparel decreased slightly in the last twelve months. The increase in retail banking on the high streets is partly explained by new entries of international banks and their aggressive expansion strategy in Turkey. Compared to the same period of the previous year, a decrease in both number of stores and size of international and luxury brands is observed in all three streets. While this trend is quite limited in Nisantasi and Istiklal Streets, it is by far more apparent on Bagdat Street. In terms of number of international brands, Nisantasi area still leads with 70 stores, followed by Bagdat Street with 54 stores and Istiklal Street with 33 stores. The majority of the luxury brands are still located in Nisantasi. Despite the decrease on Bagdat Street, it is still the prime location for luxury brands on the Asian side with 26 stores, compared to 34 stores at the end of 2014. Due to competition, market positioning and share, some of the brands prefer to be located in all of the main high streets. Excluding retail banking branches and GSM dealers, 25 brands have stores in all three streets. Especially fast-fashion brands targeting middle income groups (i.e., Mango, Zara, Topshop, Mavi), accessories and cosmetics brands (i.e., Calzedonia, Penti, MAC, Yves Roche, Gratis) and F&B brands (i.e., Burger King, McDonald’s, Starbucks, Mado) are located in all of these locations. Furthermore, strong domestic retailers in particular prefer to strengthen their market position in high streets by opening second stores in the same street. This strengthens the theory that the market is going through a “survival of the fittest” process whereby the strongest increase their market share and some of the weaker brands consolidate their stores.
ISTANBUL HIGH STREETS : SECTORAL BREAKDOWN Others 1% Pharmacy 1% Telecommunic ation 1%
Vacant 9% Bank Exchange Office 14%
ApparelShoes-Bags 47%
BooksMusic-GiftHobbyToys 2% & Art Culture 2% Home Furniture, Decoration 3%
F&B 14% Accessories CosmeticsWatchesOptician 6% Source: Cushman & Wakefield
ISTANBUL : INTERNATIONAL BRANDS (BY NUMBERS) 80 70 60 50 40 30 20 10 0 Nisantasi
Istiklal 2014
Bagdat
2015
Source: Cushman & Wakefield Note: Data only covers Apparel, Fashion, Shoes, Bags, Accessories, Cosmetics and Home decoration.
ISTANBUL : LUXURY BRANDS (BY NUMBERS) 80 70 60 50 40 30 20 10 0 Nisantasi
Istiklal 2014 2015
Bagdat
Source: Cushman & Wakefield Note: Data only covers Apparel, Fashion, Shoes, Bags, Accessories, Cosmetics and Home decoration.
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A Cushman & Wakefield Research Publication
8,000
60
7,000
50
6,000 40
5,000 4,000
30
3,000
The majority of take-up was in fashion (ApparelShoes-Bags) with a share of 37% in total take-up, by numbers. F&B and Accessories-CosmeticsWatches-Optician brands followed with 28% and 17%, respectively. Considering that some brands have more than one store in these streets, a more detailed analysis was made based on the number of brands. Accordingly, the total number of brands decreased to 656 showing a decline of 7% compared to the previous year. In the last twelve months, 67 new brands entered, while 113 brands exited from these high streets. Although the number of new entries was relatively high, most of them were small size local or national brands. Only a few international brands, such as Arabian Oud, Classico, Fred Perry and Le Petite Maison made entries to the main high streets. On the other hand, the market saw 31 expansions and 13 relocations, together on Bagdat Street and Nisantasi.
“There was a decline of 7% in number of brands, not stores, in the three main streets, caused by a net negative of 46 brands between entries and exits hinting the retail market is going through a consolidation.”
No
ISTANBUL : TAKE-UP (2014 vs 2015) (sqm)
The occupier market was quite active in the last twelve months with a total take-up of 18,000 sq.m in 112 stores, only slightly higher than the previous year (15,600 sq.m in 94 stores). Similar to last year, Istiklal Street recorded the highest take-up volume, while Nisantasi ranked highest in terms of number of stores. Number of transactions increased in all locations, however take-up volume in size only increased on Istiklal and Bagdat Streets, while decreasing in Nisantasi.
20
2,000 10
1,000 0
0 Nisantasi
Take-up_14 (sqm)
Istiklal
Take-up_15 (sqm)
Bagdat
Take-up_14 (number)
Take-up_15 (number)
Source: Cushman & Wakefield
ISTANBUL : TAKE-UP (BY CATEGORIES, NUMBERS) Books-Music-GiftHobby-Toys 1% Culture & Art 1%
Pharmacy 2% Bank Exchange Office 6%
Home Furniture, Decoration 6%
ApparelShoes-Bags 37%
F&B 28%
Accessories CosmeticsWatchesOptician 19%
Source: Cushman & Wakefield
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A Cushman & Wakefield Research Publication
In three consecutive years the overall vacancy rate showed an increasing trend, rising from 5% in 2014 to 10% as of now. Both, number and total size of vacant stores, have increased in recent years. An exception to this is Istiklal Street where vacancy rates are decreasing. Bagdat Street is the main driver of this trend with a lot of structural change happening due to ongoing urban renewal projects. Uncertainty in renting space in older buildings and Shopping Centres and Shopping Centre projects within its catchment have driven out some of the retailers, especially in the luxury segment. It remains to be seen if this trend can be reversed once the majority of renewal projects have been finalized.
“The take-up was driven unproportionally by a doubling of small size transactions below 50 sq.m hinting the smaller “no-name” stores changed hands quite actively. In addition, 31 expansions and 13 relocations were recorded.”
ISTANBUL : TAKE-UP (BREAKDOWN BY STORE SIZE) No of Transactions
In terms of store size, take-up was mainly driven by smallsize transactions (
