This article is from the Australian Property Journal archive
SYDNEY's prime retail strips continue to struggle with high vacancy rates, according to the latest research by Ray White Commercial.
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Ray White Commercial head of research Vanessa Rader said international retailers have been focusing attention on CBD’s and major shopping centres and not considering local shopping strips in Sydney such as Oxford St.
“The trials of Oxford St Paddington have been well documented after growing vacancies from around 6.0% prior to Bondi Junction Westfield’s reopening.
“Unfortunately the high rate achieved in the early 2010’s has been maintained and is currently recording 11.81%,” she added.
Rader attributed the situation to the differing attitudes of the Sydney shopper compared to high street shoppers internationally as well as the difficulty in sourcing large tenancies in the prime retail strip locations.
“Many national tenants have been enquiring on local strips however they are seeking tenancies in the 200 sqm size range which is difficult for these local areas where the average strip shop size is sub 100 sqm.
“Rents in this location appear affordable compared to prime CBD rents achieving averages up to $1,500 per sqm gross compared to Pitt St Mall rents which average in the region of $8,000 per sqm,” she continued.
Rader said Darling St Balmain in the inner west has a vacancy rate of 10.2% after sub 5.0% results back in 2008.
According to the Between the Lines – Sydney Prime Retail Strips July 2015 report, Military Rd Mosman is the stand out performer with a vacancy rate of 6.26%.
Rader said while vacancy rates are high, demand for investment stock remains strong with the latest transactions resulting in yields between 2.75% and 7.50% depending on the number of tenancies and lease term.
“Capital values have demonstrated a vast range again dependant on the quality of stock, size and the lease tenure, with ranges in the $5,500 per sqm and $14,000 per sqm.
“Given the investment nature of these properties, the values are greatly attributed to their income stream rather than a price point per region.
“Recent transactions show Military Rd to be the most affordable of the three strips, however, the volume of evidence is limited.” Rader concluded.
Australian Property Journal
