Sydney, 23 February 2014 – Sydney’s retail market is benefiting from an upswing in consumer confidence, with the healthier economic outlook boosting spending levels across the sector.
The CBRE Q4 Australia Retail MarketView highlights that low interest rates and increased household wealth are underpinning retail turnover growth.
New South Wales retail trade is outpacing the national average of 3.7% with an average of 4.1% growth annually.
By sector, CBD clothing and department store sales improved significantly in New South Wales, growing 7%, compared to the national average of 3%.
The improved economic climate for retailers in Sydney supported a pick-up in rental growth over 2013, regaining some of the losses experienced over the past two years.
Following consecutive declines in 2011 and 2012, prime Sydney CBD rents lifted 2.8% in 2013.
CBRE National Director of Retail Services Alistair Palmer said improved conditions in the retail sector had underpinned stronger investment appetite levels for Sydney CBD property.
“With consumer spending improving from low GFC lows, we’re seeing more and more retailers – particularly foreign – pushing into prime strip locations across the Sydney CBD,” Mr Palmer said.
CBRE Director, Retail Services, Leif Olson said several large international brands were looking to acquire a retail presence in the Sydney CBD in 2014.
“Retailers including the likes of Uniqlo, Forever 21, River Island and H&M have either secured, or are close to securing, space in the CBD,” Mr Olson said.
“As more foreign retailers enter the Sydney market, we are seeing intense competition across most categories of CBD retail, with many domestic retailers, particularly department stores, feeling the pinch.”
Mr Olson said international retailers were likely to continue gaining presence in Sydney, as department stores such as David Jones leased space in a bid to reduce their retail footprint and create alternative income streams.
CBRE Associate Director, Research, Claire Cupitt said softer retail conditions that characterised the last few years were the catalyst for several CBD rejuvenation projects nationwide, including Sydney.
“CBDs are going through a major rejuvenation and growth period, with numerous centres being refurbished and re-let, or built from scratch,” Ms Cupitt said.
“The renewal of these precincts has helped attract international brands to the Australian market however this is likely to stem rental growth within the prime CBD centres.”
Significant renewal projects that have changed the face of Australian CBD retailing include the Pitt Street Mall redevelopment in Sydney and the soon to be completed Emporium development in Melbourne.
The report shows there is limited new supply in the CBD retail pipeline, with the next major project being the retail aspect attached to the Barangaroo development in the western corridor of the CBD.
Ms Cupitt said retail trade was expected to gain momentum in 2014, further adding strength to the market.
“Sales conditions for department stores and clothing retailers have improved and we expect this to establish a more favourable backdrop for rent growth in the next six – 12 months,” Ms Cupitt explained.
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CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue). The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website atwww.cbre.com.au.