The city’s retail sector is heating up with agents witnessing price increases of more than 20 per cent in less than a year for prime space in the Hay Street and Murray Street mall precincts.
The city’s retail sector is heating up with agents witnessing price increases of more than 20 per cent in less than a year for prime space in the Hay Street and Murray Street mall precincts.
Colliers associate director of research David Cresp said whereas specialty store retailers occupying floor space of between 80 and 100 square metres traditionally paid annual lease fees of $2,500/sq m, they were now paying significantly more than $3,500/sq m for the same space.
“Retailers have had some pretty good conditions over the past 18 years but since the malls started being upgraded, following David Jones’ move into the city, we’ve seen prices increase markedly,” he said.
And these numbers are not expected to slow, with occupied retail space in both malls reaching critical mass and significant new retail developments on the cards for the inner-city including 140 William Street (currently out to tender), Raine Square, City Square and Century City at 100 St Georges Terrace.
The new developments, together with the sinking of the railway line and a new MetroRail station, have the potential to increase pedestrian traffic and flow, making the city an attractive ‘one stop shop’ for mid- to high-end fashion, specialty retail, food and entertainment.
CB Richard Ellis associate director retail services Fred Clohessy said the trend of higher rents for prime retail space would continue to move for the next few years.
“Retailers are happy to pay more, provided they get the right space. There is a definite need for more retail in the city with our growing population and close proximity to Asia. Perth’s landscape will be vibrant and very different in three years’ time,” he said.
While the four short-listed developers finalise their plans for the 8,500sq m William Street site, Pivot Group and the Industry Superannuation Property Trust are wasting no time going ahead with the $250 million Century City development on their 6,600sq m site between the Hay Street Mall and St Georges Terrace.
Pivot Group and ISPT have already secured a 20-year lease agreement with anchor tenant Woolworths to occupy 2,500sq m of retail space.
Lease Equity director Jim Tsagalis is currently negotiating the remaining retail leases for Century City with potential tenants keen to get a piece of the 15,000sq m of retail space available over three levels.
Mr Tsagalis said the retail benchmark for the Hay Street Mall has been set this year at $4,000/sq m on just 70sq m of prime space occupied by a specialty store, which mirrored substantial increases on other leases in the same precinct.
While leases are up, so too is consumer spending. CB Richard Ellis retail figures from 2005 indicate WA is well above the national average in retail turnover figures for the past two years and figures are tipped to surge past 2006 markers to record a 4.2 per cent change in growth from this year to next.
WA Retailers Association chief executive Martin Dempsey said retailers were struggling to find any decent space in the CBD for less than $2,500/sq m a year.
This compares favourably with retailers in centres such as Karrinyup, Westfield Carousel and Garden City, who were paying an average of $7,500 sq m a year, he said.
