International retailers look to fill vacancies left by big chain collapses
International retailers are poised to snap up the vacancies left by the collapse of Borders, Angus & Robertson and the Colorado Group, according to its retail report for the second quarter of 2011.
Jones Lang LaSalle director of national retail research Leigh Warner says overseas retailers who have been scoping out Australia would have been buoyed by the recent success of European fashion giant Zara opening stores in Sydney, Melbourne with Brisbane and Adelaide next in line.
Previously, Warner says overseas retailers’ ambitions in Australia had been “somewhat constrained by a lack of quality space options in CBD and regional centre locations”.
According to SmartCompany.com.au, Apple is set to spend more than $10 million on its first retail site in Brisbane’s CBD and British clothing operator Topshop is tipped to take over some vacated Borders sites for its Australian entry later this year including those on Chapel Street and CHADSTONE shopping centre in Melbourne as well as setting up in the Chatswood shopping centre in Sydney.
David Gordon, partner in charge of national retail advisory practice at WHK Group, says Topshop potentially filling the 2,800-square-metre Borders site on Chapel Street would help in the revival of the strip.
“And if Topshop got into the major shopping centres that should be seen as a positive because it would reintroduce foot traffic,” he told SmartCompany.com.au.
Jones Lang LaSalle data for the first half of 2011 reveals that average specialty store vacancy rates rose across all retail sub-categories over the first half of 2011 in line with the generally soft retail environment, buts still remain low.
The biggest increase in vacancies occurred in regional shopping centres, where average vacancy rose from 0.6% at the end of 2010 to be 1.4% at the end of June 2011.
According to Warner this figure is slightly misleading because this un-weighted average was heavily influenced by the smaller markets of Canberra and Adelaide.
“Regional shopping centre vacancy remains below 1% in Sydney, Melbourne, South East Queensland and Perth, which is still low any way you look at it,” he says.
A total of 762,700 square metres of retail space is under construction nationally, compares with 466,000 square metres at the end of 2009, when the impact of the GFC was at its greatest, suggesting improved conditions for developers.
However, according to Jones Lang LaSalle’s Australian head of retail management, Tony Doherty, the majority of the pick construction is being driven by specific retailers with conditions for speculative development remaining “very challenging”.
This is particularly the case in the hardware bulky goods space, where Woolworths is taking on Bunnings with its new Masters stores.
A glance at the list of major retail centres under construction in Melbourne reveals that 11 of the 21 centres due to be completed up until March 2014 are for specific retailers with six masters stores, two IKEAs and one Bunnings store.
In Sydney four out of the 13 centres under construction are being built by Bunnings, with Costco soon to open a 16,000 square metre store in Auburn and IKEA a 39,000-square-metre store in Tempe.
Other sectors looking strong are core regional and CBD shopping centres with major centre owners looking to “capitalise on an inevitable recovery in retail turnover over the next few years”.
In May, Westfield reported it was undertaking pre-development activity on eight of their centres across Australia beyond their current three projects
The four largest retail transactions this year to 30 June have been:
- The $455 million sale of a 50% interest in Northland Shopping Centre, a 92,380-square-metre super regional centre 11 kilometres north of the Melbourne CBD. The asset was purchased by CPPIB from the Gandel Group, reflecting an initial yield of 6.25%;
- Charter Hall Retail REIT and Telstra Super acquired six neighbourhood and two sub-regional New South Wales and Victorian based shopping centres in a one-line transaction from Woolworths Limited for $266 million, reflecting an initial yield of 7.94%;
- Bunnings Group Limited (BGL) transferred to Bunnings Warehouse Property Trust (BWP) 10 operational Bunnings Warehouses and three properties on which BGL will develop Bunnings Warehouses in Victoria and New South Wales, for a total price of $241.71 million on an initial yield of 7.71%; and
- LaSalle Investment Management acquired the Novotel on Collins hotel and Australia on Collins shopping centre for a total of $ 204 million from Thakral Holdings on a yield of 8.20%