At first glance, for any seasoned Sydneysider, the number of 'For Lease' signs adorning both sides of the once buzzing Oxford Street shopping strip in Paddington, might be a cause for concern.
For most retailers who are still sticking to their guns there, it is – without a doubt.
However, while Mark Smith, managing director of commercial property firm First National North Sydney, admits that the retail sector is “experiencing difficulties” – particularly in that part of town – he argues that it's not really as bad as it looks.
“Oxford Street is interesting,” he says.
“But in reality, the decline of Oxford Street was really caused by the opening of Westfield Bondi Junction. If you talk to the retailers there, you'll find that a couple of years back when Bondi Junction opened, it had a significant impact on the Oxford Street shopping strip, as well as Double Bay.
“And Oxford Street has never recovered. It has has been replaced. Or rather the retail spending that was going into Oxford street is now going into other areas such as Westfield Bondi.”
What Smith explains, going on, is that, rather than an overall downturn in the retail sector, and overwhelmingly fashion retail, what has occurred in the past few years is more likely “an oversupply of retail shops”.
This is not to say that retail is not struggling – it is. But, what may seem like the beginning of the end for fashion retail overall, is also a shift, which sees fashion businesses now spoilt for choice and moving to more fertile ground.
“Obviously caution is about with various factors at play, but there are some categories within the retail market that are outperforming,” reveals Jones Lang LaSalle manager NSW retail leasing Georgina De Angelis.
“Although women’s fashion and apparel retailers in particular are always making the headlines, it wouldn’t be fair to generalise all brands within this statement. You just need to look within your local shopping centre to see most of our established fashion brands are continuing to trade.
“Boutique and unique fashion brands are holding strong, but with new retail centres becoming more established you will also find that the surrounding retail districts will inevitably also evolve.”
This ever-changing property cycle, and the evident oversupply of retail space that has emerged over the last few years, has also more recently seen several traditional retail outposts refashioned into residential properties.
Mosman's vacant Cache Centre on Military Road, which has been sitting idle for years, is one of these which, according to an announcement made in May this year, will soon be redeveloped into a boutique residential apartment block.
The structure, to be renamed Marque Mosman, will undergo a transformation and is set to soon house 36 luxury apartments over four levels with underground parking.
But, rather than mourn the passing of one of the North Shore's veteran retail establishments, Smith says retailers should rejoice.
Why? Because a boost in population due to residential development is the best way to inject new life into a floundering shopping hub, he says.
“I would like to think that Military Road, Mosman in the fashion strip in the years to come. It has declined in the last two years because we have seen some major developments occur which have altered foot traffic and pedestrian traffic flows along the sidewalks there. Two buildings have been closed, including the Cache and the Village Green which was demolished, and both are being redeveloped into a residential projects now,” Smith says.
“So, Mosman lost the pulling power of those retailers, which included Sussan, Just Jeans, Oz Resort, for a while.
“However, when the redevelopment of Mosman Cache is complete and the upheaval has settled down, we'll get a dozen or so retailers back into the area [to service the new batch of residents].”
This, says Smith, is the key to identifying the retail growth hot spots of the future – where the population trends flourish, there too lies opportunity.
“There are pockets of growth and they will be where the population trends are growing – and those are places like South Sydney and Waterloo, Danks Street – where because the rents are relatively cheaper and there are massive residential units planned for that area, so they could be major growth areas,” he says.
“Chatswood also has developed enormously in the last few years because of the train station and developments there and the number of high rise units built in the last 10 years have spurred on retail there. Macquarie Centre is also a big one, and Bondi Junction, because the train station and increase in population there has also required more retail, hence the Westfield there now.”
“So it's not all doom and gloom, there is a silver lining on the edge of the cloud. You've really just got to look where the population is moving.”
However, De Angelis warns that local retailers wanting to secure a good deal on a budding property had better move quick – they are not the only players in the game.
“We mustn't forget the international retailers pounding our pavements seeking their flag ship stores and although this has been the case for some time, their intentions through this period remains strong,” she says.
“CBD retail malls and centres continue to remain in demand throughout all major cities despite the negative sentiment, but we are also seeing a strong influx of international interest to secure flagship locations in a majority of our nations capitals.”
Leif Olson
CBRE, senior manager, retail services
HOT SPOT: World Square Shopping Centre, Sydney (pictured top right)
Over
the past 18 months World Square Shopping Centre has seen the arrival of
retailers such as Superdry, Saxony, Nine West and Forever New open
stores. There is still strong demand for fashion retailers looking
at opening at World Square. This centre has the benefit of sitting under
three commercial office towers, the Rydges Hotel and World Tower
apartments. World Square is currently ranked number two behind Sydney’s
QVB in the Shopping Centre News (SCN) Mini Guns category, industry
shopping centre ranking. In 2011 the centre turned over $196.8 million
representing 3.1 per cent growth from the prior year.
Cameron Taudevin
Jones Lang LaSalle, senior negotiator, retail leasing team
HOT SPOT: Brisbane CBD
Brisbane CBD.
In recent years Edward Street has become synonymous with luxury retail with a number of national and international high-end fashion and accessory tenants moving to the strip. The strip has largely benefited from its close proximity to the Queen Street Mall, one of Australia’s busiest shopping malls. The recent renovations to the Wintergarden and Queens Plaza, both of which have frontage to Edward Street, has also attracted a number of luxury retailers to Brisbane and continued the popularity of the precinct. Growing demand for space along the strip, coupled with limited availability, has also seen a number of luxury retailers move further south along Edward Street in search of space. This has further continued the growth of Brisbane’s high-end fashion precinct. A number of high-end fashion brands call Edward Street home, including the likes of Hermes, Louis Vuitton, Mont blanc, Hugo Boss, Gucci, MaxMara, Bally, Max and Co, Ralph Lauren, Oroton, Rhodes & Beckett and Watches of Switzerland.
Jaycen Willox
Jones Lang LaSalle, director, VIC retail leasing
HOT SPOT: Melbourne CBD
Melbourne CBD. IMAGE: CITY OF MELBOURNE.
Little Collins Street between Swanston and Elizabeth Streets has come to life, emerging as Melbourne’s newest fashion hot spot. Strong fashion retailers such as Ted Baker, Swish Clothing, Hoss and Miss Fox are located along this strip. This precinct offers clothing giants the opportunity to group together whilst taking advantage of the smaller tenancies of 30 – 50 m2 on offer. Rental rates for this precinct have also increased dramatically over the last couple of years, with the most recent tenant securing space at $2,500 per m2.
Georgina DeAngelis
Jones Lang LaSalle, manager, NSW retail leasing
HOT SPOT: Sydney CBD
Pitt Street Mall, Sydney CBD. IMAGE: PAUL PATTERSON, CITY OF SYDNEY.
Whilst the run of the mill shopping centres are fighting challenging times the streets of Sydney’s CBD within the central core continues to be in top demand. We are seeing a particular increase in interest from international fashion brands that are pounding the pavement to secure a flag ship store to ensure they enter our shores with a bang. This demand will see the historical fashion district of Pitt Street Mall diversified with the most recent international brand, Topshop set to open in October this year. Trading from a corner location on Market and George Street, which has traditionally been a historical fashion district, the impact of the brand will see an activation in tenant demand for the neighbouring George Street locations.
Megan Lowder
CBRE, senior manager, retail services
HOT SPOT: Alexandria, Sydney
Seafolly Summer 2012 Campaign, starring model Behati Prinsloo.
The gentrification of Alexandria continues with most former industrial buildings being converted to funky residential accommodation targeted at the Gen X and Y crowd, and a hive of development activity in the pipeline around nearby Green Square. Where Alexandria has previously been known more for its bulky goods outlets, it is becoming a one-stop weekend destination for shoppers looking to browse fashion and homewares factory outlets and fresh produce markets, and spend a few hours sipping lattes at popular cafes such as The Grounds of Alexandria and new addition Bread and Circus Wholefoods Canteen. Fashion brands such as Saba, Seafolly, Lacoste, Oxford and Von Troska now grace Alexandria’s bustling streets, with further anticipated growth in fashion around the area.
Mickey Janssen
CBRE, senior negotiator, retail services
HOT SPOT: Perth CBD
Perth CBD. IMAGE CITY OF PERTH.
There is some interest from International Fashion operators for prime Perth CBD locations (Murray & Hay Street Mall).Further interest from The Just Group brands on Bayview Terrace, Claremont (retail strip sites) near Claremont Quarter.