By Aimee Chanthadavong
While New York continues to remain the most expensive retail location, three Australian cities are among the ranks of the top 10 most expensive retail markets in the world, according to CB Richard Ellis’s (CBRE) latest global retail marketview.
Sydney has jumped into second place globally with previously holding third place in Q2 2010 with the opening of Westfield Sydney. Brisbane remains in ninth place while Melbourne has moved from being 12th to 10th position.
Josh Loudoun, regional director retail services, told Retailbiz this is being underpinned by strong tenant demand from local and international retailers such as Gap and Zara
“Two factors have brought on this rent rise. One is that by bringing a lot of new brands into the market it creates more competition and as these brands open at these hot spots, it takes up space, pushing up the prices,” he said.
“The other is that new building development creates tenancy of international and national requirement and in order to maximise their tenancy requirement they draw on these retailers,
“Also, with this report we’re talking about the best location in a super prime precinct. As there is a lack of supply for tenancy, that’s where the tenants are able to increase rental prices and that’s why we really need to increase the mall size, which will have space for more retail formats.”
The CBRE report shows that super prime rents for the most prominent shops in Sydney have risen as high as $13,560 a square metre, with rents ranging upwards from $6,000 a square metre. Brisbane commands a top rental of $7,845 a square metre while Melbourne landlords are pocketing up to $6,500 a square metre.
However, Loudoun has predicted that given the current environment conditions, rent will stabilise over the next 12 to 18 months.
“The fact is that the decline of retail rent will be affected by the surrounding environment and in Australia, rising interest rates has a direct correlation to the market. Also, combined with the Australian lease structure, which is between five to 10 years long, it’d mean there won’t be any new suppliers entering the market,” he said.
“Additionally, in a three-fold aspect, the strong Australian currency has not been in favour of international retailers, utility has been growing rapidly and thirdly 12-months ago, Australia may have been one of the best places for investment but now it has come back in line and even fallen below the economy standards and there are now better countries than Australia for investments.”