Commercial Property Snapshot: Retail Within The Melbourne CBD

LAST TUESDAY, you gained some insights into the changing Retail scene, for Commercial property around Australia.

According to some recent research by JLL & CBRE (BusinessDay: 29 Feb 2012), these trends are clearly starting to emerge within the Melbourne CBD.

The current vacancy rate is hovering at around 1%. And in part, this is due to the Growing number of people living and working within central Melbourne.

However, part of the reason behind this also lies in the recent entry into the market of several major overseas retailers.

Big names like … Swarovski, Zara and Converse.

As a result, you have seen rents within the Bourke Street Mall rise by about 2.6% — to where they now sit at between $6700 and $8700 per square metre.

 Melbourne CBD Retail is undergoing some changesHowever, the tenancy mix is also changing within the Laneways and Arcades — to the point where food has overtaken fashion, now occupying more than 32% of total floor space.

As such, this growth in food & beverage further confirms the structural changes we discussed in last week’s article.

Bottom Line: As a Commercial property investor, you need to be wary of Retail property — despite the relatively low retail vacancy rates.

These large overseas retailers (including Top Gear within the inner suburbs) have been drawn to Australia by our …

  • Low unemployment;
  • Solid economic growth; and
  • Recent fall in interest rates.

However, you can’t help thinking their presence is artificially inflating the current rent levels — leaving little (if any) room for further rental growth, down the track.


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