CBRE said the impact of the new light rail and associated pedestrianisation of George Street on the city’s retail sector indicate it will soon become a major shopping destination once completed.
Freddie Kareh, CBRE research analyst, said as George Street becomes more established as a retail destination, it would compete with Pitt Street Mall as the city’s major shopping hub.
Kareh said in the 10 years to 2027, prime rents on George Street will experience a net rental increase of 55 per cent in comparison to other prime locales in the CBD – equating to a 110 per cent total rental rise over this timeframe.
“The uplift in rents and subsequent property values, in addition to the completion of light rail infrastructure and public domain upgrade, will attract more high-end retail tenants that will be able to meet these greater rent demands,” Kareh said.
Historically, George Street has not been considered an attractive central spine, with retailers over the past 10 years paying on average a 211 per cent premium to be located on Pitt Street over other prime locations on George Street.
By contrast, over the same period retailers in Melbourne have demonstrated a willingness to pay a rental premium of 109 per cent to be located on Bourke Street Mall as opposed to prime locations on the main pedestrian thoroughfare Swanston Street.
The report attributes the smaller rental gap between George Street and Swanston Street, and their respective prime locations, to the latter’s accessibility to pedestrians.
Leif Olson, CBRE’s head of retail leasing, said transforming George Street into a vehicle free zone would cement Sydney’s status as a world class retail destination.
“The positive impact of the light rail and pedestrianisation of George Street is already clearly evident, having achieved above market rental growth since the plans were announced – and attracting a new calibre of retail tenants moving from Pitt Street Mall to George Street.”
Olson said the George Street of tomorrow will be a premier pedestrian boulevard, lined with trees, street furniture and public art – a new public plaza where people meet to shop, socialise and dine.
“There is a trend of world class cities creating these boulevards like Oxford Street in London.”
The report highlights that while Pitt Street Mall will remain the premium retail destination, enhanced amenity and more competitive rents, along with a greater selection of shops along the new George Street Boulevard, will make it a more attractive proposition for retailers.
General Pants has already taken advantage of this, having recently moved from Pitt Street Mall to its new George Street store – reducing its rent by more than 60 per cent, while doubling its store size in the process.
Last year Retail Prodigy Group opened the doors to a three-level Nike flagship store on George Street.
Property firm Colliers have previously said many retailers are beginning to rethink their Pitt Street Mall precinct strategy with Forever 21 looking to exit their lease in Sydney Arcade and Lovisa and G-Star exiting the mall from MidCity Shopping Centre.
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