Sydney retail strips languishing

Sydney retail strips languishingShopper attitudes, smaller tenancy areas and the dominance of major shopping centres mean vacancy rates in Sydney’s prime retail strips remain high, according to research from Ray White Commercial.The Between the Lines – Sydney Prime Retail Strips July 2015 report says that prime retail strip vacancies have continued to be high despite the entry of international retailers into the Sydney market.Ray White Commercial Head of Research, Vanessa Rader says international retailers have been focusing attention on CBDs and major shopping centres and not considering local shopping strips in Sydney such as Oxford Street in Paddington.”The trials of Oxford Street, Paddington, have been well documented after growing vacancies from around 6.0 per cent prior to Bondi Junction Westfield’s reopening. Unfortunately the high rate achieved in the early 2010s has been maintained and is currently recording 11.81 per cent.”Rader says the situation can also be attributed to the differing attitudes of the Sydney shopper compared to high street shoppers internationally, as well as the difficulty in sourcing large tenancies in the prime retail strip locations.”Many national tenants have been enquiring on local strips however they are seeking tenancies in the 200 sqm size range which is difficult for these local areas where the average strip shop size is under 100 sqm,” she says.”Rents in this location appear affordable compared to prime CBD rents, achieving averages up to $10 per sqm gross compared to Pitt Street Mall rents which average in the region of $8,000 per sqm.”Darling Street, Balmain, in Sydney’s inner west has a vacancy rate of 10.2 per cent after sub 5.0 per cent results back in 2008.Military Road, Mosman, on Sydney’s northside, looks to be the stand out performer of Sydney’s prime strips with a vacancy rate at just 6.26 per cent.According to the report, while vacancy rates are high, demand for investment stock still remains strong across the key retail strips with the latest transactions resulting in yields between 2.75 per cent and 7. per cent.To read the report click here.