The CBD property sector shows no signs of slowing down into the near future thanks to foreign retailer investment.
Regional hubs and smaller neighbourhood shopping precinct landlords on the other hand, are still experiencing sluggish operating conditions, in stark contrast to the CBD boom. Local markets (Sydney, Melbourne & Brisbane) have seen an influx of international tenants eager to set up shop including H&M, Forever 21, Sephora & Uniqlo. With such fierce interest from overseas, CBD landlords have been able to push-up rents and prosper.
According to a Deloitte report: in 2013 Australia was host to 30 of the globe’s 250 biggest retailers. As of December 2014, the number stood at 37.
1. CBRE Australia is a worldwide real estate investment & services firm, it projects the CBD boom will continue on for now and soon we will see an explosion of luxury and premium retailers coming onto the domestic Australian market, in part, thanks to the low Australian dollar. Those retailers in particular to make an appearance are those who’ve cancelled distribution agreements with department stores and other retail outlets to set up their own shop.
2. CBRE also believes as the CBD apartment building boom rolls on and more people flock to these rejuvenated CBD and inner urban areas, it will spur shopper demand and encourage more business (as generally people prefer to shop nearby their home out of convenience a lot of the time).
3. One benefit of these larger international retailers comes about in terms of space requirements.
“One Zara store in Parramatta is 1,500 metres previously that would have been 15 stores at one hundred metres. So what it (arrival of overseas retailers) is doing is 2 things. First, it is creating a point of difference for those landlords in the suburbs who are able to attract these brands, and second, they (landlords) are able to absorb more space in one deal than they previously could in four or five deals”, says Susan Lamont, CBRE Asset Services Pacific national retail director.
4. Over the 6 months leading up to April this year, total retail sales volumes were 9% improved upon those previously recorded 2 years prior. If we also take into account the fall in interest rates, along will all these other factors, it would certainly point to optimal operating conditions for CBD landlords especially.