Perth to develop Melbourne-style laneways as retail vacancies rise

The City of Perth will continue to develop its CBD laneways as retail vacancies rise and more than 22,000 square metres of retail stock is due to hit the market over the next 12 to 18 months.

Almost one in 10 (9.7%) retail properties are currently vacant in the Perth CBD, compared with a vacancy rate of 7.4% recorded in November 2010.

The revitalising of Perth laneways began with the redevelopment of Wolfe Lane in 2008 off Murray Street just behind His Majesty’s Theatre.

The new Apple store backs on to Wolfe Lane with Knight Frank agent Amy Matraszek calling it a “Melbournesque-style laneway with Bars, Cafes and stylish services”.

Matraszek is currently seeking a tenant for up to 250 square metres of retail space at 321 Murray Street, with Wolfe Lane running down the side of this building. The gross rent is $1,500 per square metre.

“This is a rare opportunity to become part of the ‘ants trail’ effect from the traditional malls, without the mall price tag,” she says.

Grand, Mclean and Howard lanes are the next city laneways currently being upgraded.

Excluding the current laneway projects, the city has around 30 laneways that could potentially be redeveloped.

According to Savills, the laneways project aims to encourage greater use of these valuable inner city spaces, stimulate commercial interest and reinvigorate the atmosphere.

An increase in prime rents is blamed for the rise in vacancies.

Rents in the Hay Street Mall, Perth’s premier shopping arcade, currently sit between $2,200 per square metre and $4,800 per square metre.

Vacancies in CBD malls have also risen over this period – up from 7.1% to 8.6%.

Clothing, footwear and personal accessory make up the majority of the space in retail arcades at 35.7% followed by cafes, restaurants and takeaways (17.6%) and service businesses (16.1%).

The biggest retail development currently under construction is Saracen Properties’ 13,000 square metre Raine Square project at 298 Murray Street, due to be completed next year. It forms part of a 44,000 square metre, 20-story office tower, which has been leased to Bankwest. The retail component – 53 shops, a supermarket and food hall - is 70% pre-leased.

Brookfield Multiplex is developing a new city square at 125 St. Georges Terrace which will comprise 6,000 square metres of retail space. Stage one is due for completion at the end of 2012, whilst stage two is due for construction in 2012.

Another major long-term plan is the $2 billion Perth City Link Project expected to deliver boutique office, retail and residential to the Perth CBD market by 2016.

Around 24,000 square metres of retail, hospitality and commercial floor space will join the market as part of this mixed use development which will link   city’s retail hub with the Northbridge entertainment precinct.

Expressions of interests for the City Link Project will be open until November 10 with a final selection expected by the end of 2012.

Despite the current high vacancy rate, Savills says the strong economy and the increased mining activity, means the long term outlook for retailing in Western Australia looks positive.