What’s on the menu for retail?
Previously, the domain of fringe CBD professional services, newsagents and pawn shops, the cultural rise of cafes, bars, restaurants and providores is changing the face of strip retail and neighbourhood shopping centres across Australia.
In April, the Gold Coast will host the Commonwealth Games. Many have hailed the event as the catalyst for the re-enlivening of a city which experienced a prolonged GFC hangover. The lead-up to the 11-day event has coincided with a surge in commercial and residential development, a 7.2 per cent per cent rise in median house values and public infrastructure commitments.
However, Director of Retail and Commercial Assets at LJ Hooker Commercial Gold Coast, Ashley Moffat, attributed the rise in confidence to an all-round evolution of the city.
“You can be walking along a street, past a non-descript door where, when you push through it, you’ll find a bar - full of people - that you wouldn’t have otherwise known existed,” he said.“ That’s a huge trend in retail, but like other retail developments, I don’t necessarily think it’s been driven by the Commonwealth Games: just a diversified population-base that’s ready for – and demanding – it.
“There’s a rise in mature, sleek retail – restaurants with funky fit-outs with equally funky menus. It doesn’t have to be on the beach; we’ve seen a lot of this regeneration happen along the Gold Coast Highway at the southern end of the city.”
In the high-profile destinations of Surfers Paradise and Broadbeach, Mr Moffat said retailers pay gross face rents of $1200-$1500 per square metre, which can only be supported by businesses ‘that can do big numbers’.
“Around Mermaid and Nobby beaches, tenants are paying half that rate.
“Two years ago, there were no rooftop bars on the Gold Coast and now there are probably half a dozen.
These refitted commercial spaces were formerly held by accountants, solicitors and other professional services, but now these white-collar professions are being pushed back away from the strip to business parks on the west of the highway or Tweed Heads.”
Sydney routinely competes with Melbourne for Australia’s culinary crown. But what isn’t debatable, is the appetite for investment-grade retail in the Harbour City.
In October, LJ Hooker Commercial Sydney took to auction the Tropicana Caffe, the birthplace of what is now known as Tropfest
, one of the world’s largest short film festivals.
The property sold before auction for $6 million, representing an exceptionally tight 4.2 per cent yield.
“There’s still investors in the $5 million and above range, but anything that is priced under $1.5 million does not stay on the market long,” said Mr Griffiths.
“Wealth has increased in Sydney and with leases typically running for three to five years, retail is a ready-made investment, especially in the city-fringe.”
Mr Griffiths said 100-150sqm spaces remained the ‘sweet-spot’ for tenants.
He said southern suburbs such as Waterloo and Rosebery, which had undergone gentrification from light industrial and warehouses to mixed-use residential, were in-demand from café, bakery, delicatessen owners and similar operators.
“Convenience is pivotal to inner-city living, and while Woolworths and Coles’ metro-style stores are well patronised, small scale, artisan-style retail food and beverage are still in high demand.”
Tasmania’s retail scene has been steadily growing on the back of the rise of domestic and international tourism, in part by the recognition of its premier food and wine, stunning environment, and man-made attractions headed by the innovative MONA.
Investors have been attracted to the comparative affordability of retail investments in the burgeoning market.
“We’re seeing yields tighten across the board for all investment grade stock, and retail has been a healthy part of that,” said LJ Hooker Commercial Hobart Managing Director Mark Devine.
“But we’re not really seeing rents rise outside of CPI because there’s still a decent amount of retail space left to lease.”
Hobart’s population is tipped to nudge 240,000 residents by mid-year. While coming off a much smaller base than the majority of other capital cities, it nonetheless recorded strong population growth of 2.47 per cent in 2016.
Infrastructure additions such as rebuilt Myer Centre, the CBD’s Elizabeth Street upgrade, rebuilding of the city hospital and redevelopment of the university will positively benefit the retail sector going forward.
“MONA has attracted tourists to Tasmania with a higher-disposable income, but there’s retail and commercial development targeted at the residential population coming on-line in the next 12 months.”
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