The property firm’s retail team recently undertook a trip to Asia, meeting with over 50 brands, which reportedly are all looking at expansion in the Australian market.
CBRE said evidence of this is shown with luxury fashion house, Acne Studios, opening later this month in a 380sqm tenancy on the corner of King and Elizabeth Street in the Sydney CBD.
Australian head of retail leasing, Leif Olson, said demand for Sydney CBD space remained strong from both national and international brands, particularly those in the luxury sector.
“Increasingly, brands are looking to George Street for expansion rather than Pitt Street Mall as this will provide consumers with a much greater selection of retailers on the new George Street pedestrian boulevard,” Olson said.
However, while demand remains strong, Olson noted that higher rents were driving an increased focus on due diligence.
“Conscious of rising occupancy costs, retailers are conducting more due diligence to ensure that they find the right site to meet their requirements and landlords are now making a significant investment to perform upgrades or reposition their assets to attract quality tenants,” he said.
According to CBRE, leasing prime CBD retail space in Sydney became even more challenging in the first half of 2017, with limited stock driving rental growth of circa 10 per cent.
CBRE said its latest research highlighted that the prime Sydney CBD retail market bucked the trend of slower rent growth across all other retail property types in H1 2017 relative to the corresponding period last year.
“The low availability of quality CBD space and a spillover in demand from the super prime retail sector helped fueled prime rental growth in H1,” CBRE senior research manager, Danny Lee, said.
CBRE senior associate director, Zelman Ainsworth, also noted that landlords were needing to increasingly adapt to maintain relevance in what was a fast-changing market, particularly in retail markets outside of the Melbourne and Sydney CBDs.
“We are finding that it’s all about place making and putting customer experience at the forefront,” he said.
“Leveraging technology, active engagement with customers and linking online retail with bricks and mortar is what the successful retailers are doing to maintain high sales levels and profitability. Landlords who proactively understand these new drivers in retail, and look for way to evolve their retail holdings to assist retailers, are seeing almost no vacancy and high rental levels maintained.”
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