Vacancies rise on Rundle Mall in weakening Adelaide retail market
Retail rents are forecast to come under pressure in Adelaide’s premier shopping strip, the Rundle Mall, due to a rise in vacancies.
According to CBRE, vacancies in the mall rose to 3% in June 2011 compared with 2.2% a year ago, with the closure of Borders and Colorado the notable tenant departures.
The 1,800-square-metre, three-level store located at 97 Rundle Mall was vacated by Borders in June and remains listed for lease, with CBRE’s retail services manager Julia Pottenger and Lou Rentis from Brock Commercial Adelaide marketing the property.
A further nine shops in the mall are listed for lease on realcommercial.com.au.
Prescott Securities chief economist Darryl Gobbett told The Adelaide Advertiser in June the mall was struggling due to people spending their money on staple items like groceries and keeping their savings intact.
The 3% vacancy rate is figure is significant when compared with vacancy rates in other premier CBD retail strips.
On Sydney’s Pitt Street Mall, the vacancy rate has shrunk to just 0.6% while in the more subdued Brisbane market, the vacancy rate on the Queen Street Mall stands at 1.9%.
Overall CBRE’s Adelaide Retail MarketView report paints a picture of tough conditions for the retail sector, with many retailers opting to mark down and clear stock outside the traditional sale periods to create cash flow.
CBRE global research and consulting manager Kate Gray says a number of recent receiverships have also impacted the sector, causing the closure of three of the Colorado Group’s sites along with the Borders store on Rundle Mall.
“Retail property had performed exceptionally well compared to other property sectors during the GFC due to the stimulus packages offered,” Gray says.
“It is unsurprising that there are now signs of weakness, with 2011 likely to be a year of consolidation for the sector.”
According to Pottenger there is still demand for some high-profile locations such as Rundle Street and The Parade in Norwood.
The Parade and O’Connell Street have experienced declining vacancies and relatively stable rentals, with the vacancy rate on O’Connell Street decreasing to 3.2% in June from 4% a year before and the vacancy rate on The Parade falling from 5.3% to 4.3% over the same period.
However, vacancy rates on King William Road and Jetty Road have jumped to 5.4% and 6.3% respectively.
This has led to easing rentals on Jetty Road, where 13 shops were vacant as at June, with a further two stores being advertised for lease with a sitting tenant.