Rising Rental Rates in Istanbul's Prime Retail Locations: Insights from Bağdat Street, İstiklâl Avenue, and Nişantaşı

In the ever-evolving landscape of Istanbul's retail sector, significant changes in rental rates signal shifts in both market dynamics and urban development strategies. A recent report from the Turkish branch of the international real estate analytics company Cushman&Wakefield provides a detailed examination of these changes, particularly in the city's three main commercial arteries: Bağdat Street, İstiklâl Avenue, and the Nişantaşı district.

The Changing Face of Istanbul's Retail Spaces

2023 has been a pivotal year for Istanbul's retail market, witnessing a notable increase in rental costs across Bağdat Street, İstiklâl Avenue, and the Nişantaşı district. This rise in rent is partly attributed to the relocation of commercial points from older buildings, aligning with the city's urban transformation programs. The report indicates a shift towards leasing new spaces, with 39% of areas in transformation in 2022 being rented out in 2023, alongside 40% of previously vacant spaces.

This shift has not only increased the proportion of lease transactions, which jumped from 51% in 2022 to 67% in 2023 but also led to a significant rise in rental rates. As a result, some businesses, including flagship stores of major brands, have had to downsize their leased areas, especially in high-end markets like Nişantaşı, despite a 27% increase in lease transactions in the area compared to the previous year.

Insights into Specific Areas

Bağdat Street stands out with an interesting trend: the average leased space slightly increased to 230 sqm. This could be because Bağdat Street houses a large number of international brand stores, making up 21% of the retail space, compared to 16% in İstiklâl and 15% in Nişantaşı. However, it's important to note that the majority of retail spaces are still occupied by local Turkish brands, accounting for 82.5%.

Investment Opportunities and Market Adaptations

The rise in rental rates across these prime locations underscores the evolving nature of Istanbul's retail market. Investors and retailers are adapting to these changes by strategically choosing their locations, sizes, and the type of spaces they lease. Moreover, the urban transformation initiatives offer new opportunities for businesses to position themselves in emerging or revitalized areas, potentially maximizing their visibility and customer footfall.

The retail landscape in Istanbul is a reflection of the city's dynamic, evolving nature. For investors, understanding these trends is crucial for making informed decisions, especially in prime areas like Bağdat Street, İstiklâl Avenue, and Nişantaşı. As Istanbul continues to grow and change, these commercial arteries remain at the heart of the city's economic and social life, offering rich opportunities for those willing to navigate its complexities.

For more insights into Istanbul's real estate market and investment opportunities, contact BARNES Türkiye.