The new retail and residential entrants and revamped stores has helped consolidate Sydney’s Pitt Street Mall, Melbourne’s Bourke Street Mall and Brisbane’s Queen Street as some of the most expensive places in the world to rent a store.
While the top spots are held by the likes of New York’s Fifth Avenue, Paris’ Avenue des Champs-Elysees and Hong Kong’s Causeway Bay, Sydney, Melbourne and now Brisbane are holding their own, particularly in the Asia-Pacific region.
In the latest Cushman & Wakefield Main Streets Across the World report, Pitt Street has cemented its place at no. 7 globally, while Melbourne’s Bourke Street is no. 17 and Brisbane’s Queen Street Mall is 32nd in the world.
The report is based on rent per capita – per square foot in American dollars and per square metre in euros – and tracks 462 of the top retail streets around the globe.
In Sydney, the average rent per square metre per annum is about $12,000, Melbourne’s is $6600/sqm and Brisbane is $4050/sqm.
Cushman & Wakefield’s national director of research, John Sears, has said there is $62 billion of infrastructure development across Sydney’s CBD due to the upgrades along George Street, Circular Quay and a swath of new apartments surrounding Hyde Park.
Melbourne and Brisbane are also in the midst of CBD redevelopment and all three cities are seeing a rise in demand for an array of retail offerings. This is underpinning rental growth.
“These developments will help drive economic growth by making it faster and easier to move around the CBD, promote Sydney as a destination and create the space to absorb future business growth,” Mr Sears said.
Cushman & Wakefield retail leasing directors Matt Hudson and Ben Tremellen said this rise in population, from new office developments, residential towers, hotel projects and student accommodation, is driving a change in tenancies across the cities.
Where once Pitt Street and Bourke Street malls were dominated by department stores and the international fashion brands, banks, supermarkets, digital and electronic equipment and now cosmetics, are all vying for the prime retail sites.
It is also putting pressure on landlords to up their game and freshen up their stores and merchandise, in order to achieve the sales necessary to pay the high rents.
“Sydney is bursting at the seams,” Mr Hudson said.
“With Pitt Street Mall having the house-full sign, and if a retail site is tired and losing customers, there is a long line of potential new players.”
Mr Tremellen said with the population growth rising in CBD living, banks in particular, are coming back from the suburbs and want prime CBD sites to service the expanded customer base.
“These tenants want bigger footprints and are willing to pay for a spot in the prime, main streets across the country,” Mr Tremellen said.
“This trend will continue and if a retailer has not kept up its relevance to the consumer … they will be caught in the rotation game.”
Main streets in Asia
According to the report, food and beverage operators remain a key driver of demand, although health and beauty, fashion, sports and lifestyle brands have been equally prominent across much of the region.
Technology is playing a major role, exemplified by Singapore’s drive towards becoming a smart nation, with retailers increasingly turning it to their advantage to attract customers and drive store sales.
It says activity in the Australian retail market has been limited by the low levels of availability but with new developments and lease expiries on the horizon, there are an increasing number of opportunities for landlords to secure high-quality tenants.
One of the most recent trends has been for domestic retailers to move to suburban shopping centre locations, which has freed up CBD space for major international operators.
“With a maturing retail sector and a resurgence in inner city living, city centre streets and malls will continue to see strong retailer demand. Extended trading hours will provide an additional boost to the market, with shops in some cities now open from 7am to 7pm and a further liberalisation possible in Melbourne and Sydney,” the report says.
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