An increasingly time-poor lifestyle is causing customers to demand more convenience-based retail in Australian CBDs, with banks, supermarkets and health insurance companies expanding their reach into major city retail precincts, according to a new report by CBRE.
Prime retail space is increasingly driven by service-based operators, with CBRE’s head of retail & logistics research Kate Baily stating retail markets are adapting to the changing demand.
“The divergence between apparel and convenience-based retail is becoming more evident, with landlords capitalising on consumer appetite levels to provide more opportunity for banks, supermarkets and insurance providers in major markets,” Bailey said.
“In Melbourne for example, St Collins Lane is embracing a new leasing strategy to refocus the tenant mix to convenience-based retail in a bid to attract more foot traffic and complement the existing apparel retailers located in the precinct.”
CBRE’s head of retail leasing for Australia Leif Olson noted an upturn in demand from the service based retail sector seeking prime and super prime retail sites.
Westpac, Suncorp, Woolworths and Optus have all entered leases on premium space in Australia’s leading shopping precincts, said Olson.
“The expansion of service-based retailers taking multiple sites in proximity highlights that the CBD is a unique and diverse retail market that can sustain further growth in the sector,” Olson said.
Shopping centres remain the most sought after retail asset, with transaction volumes in the second quarter of 2018 totalling $1.9 billion, more than double the previous corresponding period.
Clothing and footwear retailing saw strong growth of 3 per cent in the year to May 2018, higher than the 1.6 per cent growth seen in the previous corresponding period.
Regardless, national CBD rents have remained flat for three consecutive quarters, with further growth in the second half of the year expected to be minimal.
Retail investment, during the second quarter of 2018, rose 7.5 per cent to $2.2 billion, while retail transactions totalled $3 billion year to date – sightly below the $3.2 billion from the first half of 2017.
Shopping centres are still crowned the most sought after retail asset, with $1.9 billion worth of transactions taking place in the second quarter of 2018 – more than double the volume of the previous corresponding period.
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