Commercial Property: The Changing Retail Scene

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<span class=THERE WAS an article in The Age last Saturday (BusinessDay) — which provided some fascinating insights into Australia’s retail scene.

Based upon GPT’s national portfolio, some interesting long-term trends are taking shape. And while GPT’s overall earnings actually rose by 7% over the past year … it required a fair amount of “fancy footwork” to achieve that.

For example: When Borders (paying $735,000 pa in rental) vacated Rouse Hill shopping centre in N-W Sydney, the replacement tenants included … a “gym, two restaurants and a couple of small outlets”. And yet, their combined rental totalled $786,000 per annum.

Since 2009, most landlords have been noticing a similar trend across the country. And this relates to how consumers are now choosing to spend their retail dollar.

It all comes down to what is now being termed the … “Decline of Stuff” OR the … “Rise of the Restaurant”.

During last year, shopping centres around the country reported consumers were spending less on merchandise (“Stuff”) … and more on service-related items like … gym memberships, food & beverage, travel, personal services and mobile phones.

And this is clearly being reflected in the accompanying table, as consumers’ needs and preferences respond to the changing global economic backdrop.

Bottom Line: This growing trend is now likely to become a structural change, as far as ongoing consumer spending patterns are concerned.

Therefore, you will need to factor this into your cash-flow projections, for any Retail properties you are considering.

 

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