Oxford Street back in vogue with tenants
Oxford Street is reclaiming its premier high-street mantle, lifting rents and producing its lowest vacancy rate in a decade, according to an inner-city leasing specialist.
In the last six weeks, LJ Hooker Commercial Sydney has signed five leases along Oxford Street. The tenant interest shows the Paddington-end of the arterial is tacking through the retail sector’s economic headwinds, recovering some of the appeal it lost since Westfield Bondi Junction unveiled its 2004 revamp.
Following Westfield Bondi Junction’s revamp, the Paddington-end of Oxford Street struggled with vacancies above 20%, but LJ Hooker Commercial Sydney
Sales and Leasing Executive Paul Trachtenberg
said the current rate was sub 5% between Glenmore Rd and Queen St.
Recent leases for larger retail spaces were in the $800-$1000 per square metre bracket, while smaller, designer fashion-focused stores were commanding more than $1200-$1400 psm. Mr Trachtenberg
said current rates were a 10-15% premium on rents that were asked 12-24 months ago.
recently signed national retailer SABA to the strip, which has taken a 175sqm space at 280 Oxford Street directly opposite Country Road.
Complementing the run of leases was the relocation of boutique homewares retailer Afghan Interiors from Surry Hills to 80sqm at 274 Oxford Street; cult collectibles Bloodworth Bellamy moved from Enmore to an 85sqm site at No. 346; NZ-based OPY Fashion is continuing its Australian expansion by taking 100sqm at No. 372; while Val Parks Menswear has moved from the CBD to a 127sqm at No. 406.
The leases follow on from the relocation of Surry Hills favourite Great Dane Furniture to the strip recently.
said Oxford Street was back in favour for two reasons: the tussle in patronage with Westfield had settled over the last decade; and experiential high-streets were holding up against the rise of e-retail.
He said the nearby Merivale-led restaurant additions – Fred’s, The Chicken Shop, The Paddington and Centennial – and others including Saint Peter and The Italian Bar had added to the tenant appeal, re-enlivening the ‘day-out’ in the precinct.
“When Westfield (Bondi Junction) unveiled its redevelopment in 2004, there was a migration of anchor tenants to the centre with smaller retailers assuming the vacant space along Oxford Street,” said Mr Trachtenberg
“That was a big step up in rents for the boutiques and we saw a procession of businesses leave, unable to cope with the overheads of the strip and the loss of foot traffic to Westfield.
“Fine food is proving a great accompaniment to fashion and homewares, and the foot-traffic along the strip proves it.”
A main indicator of tenant confidence was the length of recently signed leases, said Mr Trachtenberg
“In the last two months, retailers have been committing to two to three-year leases, and up to five-year terms with options in some instances,” he said.
“Pop-up stores have been a crutch for many landlords along Oxford Street in the last decade, but we’re going to see fewer of these businesses able to afford the rents along the rejuvenated strip in coming years.”
The recently released Monitor examined the challenging nature of regional and strip retail in the face of rising online spending and wider economic influences. The Monitor forecast retail turnover to trend higher over the coming three years but remain subdued in historical terms as jobs and wage growth remained stagnant.
Although the nationwide value of retail transactions reached $10 billion over FY17, the sum was influenced by a handful of large transactions, said LJ Hooker Commercial Managing Director Mathew Tiller.
Amongst the backdrop of structural change, Mr Tiller urged landlords and tenants to work collaboratively to address the shared challenge of e-retail.
“Retail landlords who want long-term security need to be thinking about experiential tenants who are going to best succeed with experiential services and that means being accommodating in fit-outs and repurposing,” said Mr Tiller.
“Discount department stores and the like are already reviewing their strategies, shifting to smaller retail footprints and embracing e-retail.
“Experiential tenants and service-based operators such as medical, gymnasiums, co-working offices are going to come to the fore in the new retail environment.”
The Monitor also found that yields were at risk of softening as bond rates rose.
“Landlords seeking low yields will be looking to divest over the coming 12 to 24 months. We could see listings loosen up over the period.”
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