This article is from the Australian Property Journal archive
THE year ahead will be challenging for Sydney's prime shopping strips, particularly precincts with high emphasis on fashion retailers, according to CBRE.
Weak retail sales are putting pressure on retail strips like Campbell Parade Bondi; Military Rd Mosman; the Double Bay precinct; The Corso Manly; Darling St Balmain; Oxford St Paddington; and King St Newtown, according to CBRE’s latest Sydney Retail MarketView.
CBRE global research and consulting senior analyst Monica Khamis said rents across these six locations had fallen by 1.4% during 2011 and the total vacancy rate increased to 5.5% as at October 2011.
“It is likely consumers will maintain a cautious attitude this year and continue to limit discretionary spending on fashion. As a result the year ahead may be challenging for Sydney’s prime shopping strips,” Khamis said.
However, some precincts are feeling more pain than others.
CBRE retail services senior manager Megan Lowder said whilst fashion based precincts had been particularly hard hit, food-based strips had been relatively resilient.
Sales turnover for cafes and restaurants, which account for around 18% of tenants on shopping strips, has increased despite subdued consumer confidence along food-based strips such as Campbell Parade and Darling St.
The vacancy rate in Darling St Balmain is the lowest out of all the precincts, at 1.8% whilst Campbell Parade was 3.7% and The Corso in Manly was 3.8%
In contrast, the fashion mecca of Oxford St in Paddington has the highest vacancy rate of 7.8% followed by Double Bay at 7.5%. Military Rd Mosman has also suffered, with the vacancy rate rising to 5.3%.
On the rental front, Lowder said owners were being forced to accept shorter terms of leases in order to attract tenants and incentives had increased significantly.
“The Double Bay precinct has been most affected, with indicative gross face rents having fallen by 10% during the December quarter and incentives having increased from three months rent free to 12 months rent free on a typical five year lease deal,” she added.
Despite the stagnant retail market, properties along Sydney’s prime strips remain tightly held, Lowder said investors were still prepared to pay tight yields for assets, as evidenced by the recent $17 million sale of four shops on Campbell Parade on a yield of 6.0%.
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