Melbourne, 26 February 2014 – A lift in the number of retail developments and refurbishments being undertaken across Melbourne will expand the city’s retail market in 2014.
The CBRE Q4 Australia Retail MarketView report highlights increasing activity in Melbourne’s retail sector, with 55,500sqm of new supply forecast for completion in 2014.
The largest retail development due to come online this year is The Emporium shopping centre, which will add 45,000sqm to the CBD retail supply. Other major centres in the development/redevelopment pipeline include St James, the Strand, GPO, Galleria and Upper West Side.
CBRE Associate Director, Research, Claire Cupitt said the large retail supply pipeline was being supported by increased activity in the CBD residential market.
“Melbourne’s CBD retail market is currently undergoing a major growth period, which is being supported by the high volume of apartment developments with ground floor retail, rejuvenation projects such as ‘The Walk’ and refurbishment of several major CBD shopping centres,”Ms Cupitt said.
“2014 is forecast to be a more successful year for Melbourne retailers, with improving levels of consumer sentiment and household wealth creating a stronger spending environment in the medium term.”
CBRE Retail Leasing Manager Zelman Ainsworth said Melbourne continued to position itself as an international city.
“International retailers are impressed with the strong performance and growth of Melbourne’s CBD, despite reports of challenging retail conditions,” Mr Ainsworth said.
"As a result of Melbourne’s growing profile among international retailers, high-end brands are identifying the Victorian capital as a target market to expand into.”
Improved retailing conditions toward the end of last year supported a pick-up in retail trade.
In November 2013, Victoria experienced 0.9% growth in retail turnover, with clothing and footwear retailing recording the sharpest jump in annual sales, lifting 9.6% in the preceding 12-month period. However, CBD prime rents saw only a marginal uplift of 0.4% in retail turnover in the year to December.
The report shows that while consumer confidence slowed in December from a spike post the federal election, sentiment has improved from a year ago and should support higher levels of retail trading.
While the Melbourne CBD vacancy rate remained tight at 2.10% during the quarter, centres witnessed the largest change in vacancy as redevelopment projects forced tenants to relocate. Despite this, street fronting shops maintained record low vacancy rates.
CBRE Associate Director, Melbourne City Sales, Josh Rutman said the high volume of retail projects being undertaken in the Melbourne CBD had seen retailers push outside of the core retail district.
"As a result of retail projects underway in the city centre, there is growing demand for retail space in Melbourne’s prime strips including South Yarra, Port Melbourne and Windsor,” Mr Rutman said.
“In particular, there is a lot of activity from hospitality and food operators wanting to acquire a presence in Melbourne, with solid demand coming from both new and existing companies.”
The report shows food retailers now dominate CBD street frontages, surpassing fashion retailers as the most prevalent tenant type on the city’s retail strips.
Ms Cupitt said as Melbourne’s CBD retail market expanded, tenants were considering locations away from traditional strips to secure space.
“Chanel recently opened a flagship store in the former Church of Scientology building on Flinders Lane – Chanel’s now largest boutique in Australia. This is particularly significant, given it is the first time a luxury retailer has moved from Collins Street to the lower end of Russell Street,” Ms Cupitt said.
Mr Ainsworth said Hugo Boss and Tiffany & Co had recently renewed leases at refurbished stores on Collins Street, just out of the traditional ‘Paris’ end of Collins Street - further demonstrating growth underway in the city centre’s retail market.
He added: “A new wave of international competition is expected to enter the market in 2014, with Uniqlo, H&M, Hollister, River Island and Forever 21 several of the brands looking to open their doors in Melbourne within the next six months.”
For Australian/international news or global stories, follow us on Twitter.
About CBRE Group, Inc.
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.