This article is from the Australian Property Journal archive
GROWTH in service tenancies has prompted a sharp reduction in retail property vacancies along Claremont’s Bay View Terrace, making it one of the strongest performers among Perth’s shopping strips.
According to Ray White Commercial’s Between the Lines report, produced with LMW, vacancy along Bay View Terrace was crunched from 10.16% to 3.78%, at just 335 sqm of available space. Napoleon Street in Cottesloe also performed well with a 267 basis-point firming to just 214 sqm of vacant space driven by an increase in food retailing.
Conversely, Subiaco vacancies skyrocketed from 5.94% in June last year to 15.19% now as a number of businesses closed down and food operators relocated.
Leederville and Mt Lawley-Highgate also saw increases in vacancies to 2.39% and 12.03% respectively.
Ray White Commercial’s head of research, Vanessa Rader said the Perth retail market has been under increased pressure, “just like all retail markets across the country”.
“Over the past few years there have been a strong reduction in retail trade growth results most notably for discretional goods retailing which have been exacerbated by the fundamental poor economic condition across the state.
“Encouragingly has been an improvement in employment locally which has translated into some further increases in GSP highlighting upward growth in economic fundamentals for Western Australia.”
Rader said the proliferation of online shopping had been a driving force towards the demise of many retailers over the last 10 years, while emergence of groups like Amazon into Australia now 12 months ago had put further pressure on competition for goods which has resulted in a change in retailing.
“A greater emphasis on experience-based retailing has been key, providing greater entertainment, activity and education in-store to attract customers.
“Also considering savings levels are increasing and discretionary spending is falling, the move to more convenience-based retailing around food has been key for the success of many centres and retail strips. Parking continues to be of growing importance particularly for retail strips who rely heavily on providing easy and free access for customers. Looking ahead, the retail mix will be key to attract and retain tenants however rents will need to remain competitive to keep strips vibrant,” she added.
Vacancies coming down in The Bay View Terrace were in line with a shake up in the tenancy mix. The services sector now accounts for 20.62%, accounted for by Australia Post, banks and real estate. Clothing and soft goods has reduced its size proportion from 28.48% to 26.05% but continues to be the largest occupier of stock.
Bay View Terrace’s low vacancy has seen rents achieve up to as high as $2,000 per sqm net. Strong demand for investment assets in the tightly held strip have yields remaining in the 6.00% range.
The tenancy profile of Napoleon Street has remained steady as vacancy firmed, with the most noticeable change in the café and restaurant retailing category now representing 15.93%, up 322 basis points. Clothing and soft goods remains the most dominant sector at 33.97%, reaffirming its fashion hub reputation.
Rents are expected to remain in the $650 to $700 per sqm net range. The single sale over the past two years was struck at a sub 4.00% yield.
Rokeby Road in Subiaco was “the most active”. Challenging retail conditions forced out long standing tenants including Esprit, Witches Cauldron and Daneechi Swimwear. The clothing and soft goods category has contracted to 12.99%. Food retailing, specialised food and cafés and restaurants now account for 24.51%.
Oxford Street, the standout performer in our prior Perth Prime Retail Strip report, recorded a zero-vacancy factor back in June 2017, and there has been limited change aside from a small increase in vacancy to 2.39%.
“This market with an “eat street” status is dominated by food related retailing both in specialty foods as well as cafés and restaurants, which accounts for 58.43% of the total mix,”
The services, other personal and household good retailing and recreational goods retailing all representing a similar split of around 10% of the total occupiers with clothing and soft goods slightly less at just 8.50%.
“Oxford Street is a highly regarded retail location and has managed to remain strong despite the emergence of revitalised retail strips of Angove Street, North Perth and Scarborough Beach Road, Mt Hawthorn,” Rader said, citing food being an integral part of the retail mix, with a diversity of cuisines on offer across the precinct.
Beaufort Street continued its high vacancy into 2018, growing from 9.01% to 12.03% over 15 months.
Australian Property Journal
