(Forbes.com)There's a gravitas to a retail address on New York City's Fifth Avenue, the city's most famous shopping strip — especially at 57th Street, where you'll find Bergdorf Goodman and Tiffany & Co. But along with that gravitas comes a hefty price: Those two luxury retailers are sitting on the world's most expensive addresses.

Even at a time when the commercial and residential real estate markets nearly everywhere else have fallen apart, the price per square foot in these and other luxury retail locations remains sky high thanks to a lack of available locations and plenty of demand.

The average going rate on Fifth Avenue, between Central Park and 42nd Street, reached $1,850 US per square foot this year, making it the most expensive stretch of addresses in the world, according to Cushman Wakefield, an international real estate investment group.

And while tough economic times might encourage retailers to try and renegotiate their leases in other prime shopping locations, such as Ginza in Tokyo, it's unlikely there's going to be much wiggle room on Fifth.

"There's only going to be one opening on Fifth this year, at 666 Fifth Ave.," says Gene Spiegelman, executive director of retail services at Cushman & Wakefield. "There's no one that needs to make a deal or get out of its space for 2009."

Price drops

While Spiegelman remains upbeat about top-flight addresses holding their value, he says to expect price drops and negotiations to be a major theme for 2009 essentially everywhere other than Fifth Avenue, from New York's Madison Avenue, only a few blocks away, to Via Condotti in Rome.

'The market is clearly going through a correction.'—Jeffrey D. Roseman, Newmark Knight Frank Retail

"The market is clearly going through a correction, and it's two-fold," says Jeffrey D. Roseman, executive vice president of Newmark Knight Frank Retail, the New York arm of the London-based firm. "Prices were artificially inflated to begin with, and with everything that's going on, spending is down."

One place where the drop in spending has caused a drop in retail real estate values is New Bond Street in London, where prices are already down from last year. Between 2006 and 2007 retailers paid $813 per square foot on average per year — now they pay $810. In massive, multifloor stores like Asprey or Ralph Lauren, that $3 difference adds up.

The drop wasn't caused purely by a slowdown in spending, but also because the pound has lost juice to other major currencies this year — down to as low as $1.49 against the dollar from as high as $2 in late 2007. Add in the British recession, and it's easy to see why property values are softening.

Even though London has seen a slide, many other high streets have — thus far — resisted markdowns. Having a shop on Via Montenapoleone in Milan or Avenue des Champs-Elysees in Paris, with the Guccis and Louis Vuittons as neighbors, costs $983 and $1,134 per square foot, per year, respectively.

Waiting to pounce

Only time will tell if those particular addresses will remain so expensive. What isn't hard to determine, however, is that one man's price drop is another's opportunity.

Some companies, like clothing retailer Forever 21, have seized on the opportunity of a slipping market. The chain scooped up a 90,000-square-foot property in New York's Times Square in November that had previously been occupied by Tower Records. The location will be Forever 21's largest and the company is paying only $809 per square foot for it.

"For retailers able to get into New York for 20 per cent less than it was a year ago, I think you'll see it pick up," says Roseman. "Once the base is set, which I'm not sure it is yet, then it will be time to jump back."

But it's not just about Forever 21 selling clothes at its new location; it's about advertising.

Most forecasts project a fall for ad spending in 2009, a core method for retailers to reach customers. According to ZenithOptimedia, a London ad industry research firm, overall spending will trend down 0.2 per cent worldwide with 5.7-per-cent drops in North America and Western Europe. A highly visible shopping location can make up for the exposure lost by a cut in ad budgets.

"If you look at Regent Street, Bond Street, Champs-Elysees, Causeway Bay — all have the benefit that they're international branding opportunities," says Spiegelman. "Particularly in a market where people are cutting back on advertising, if you have prime real estate, that's a great branding opportunity."

In other words, these locales aren't simply about the relatively small number of people who shop at them; they're about nearly everyone walking by them. Which is why the most expensive addresses stay so expensive.