Melbourne retail property soars
This increased demand has occurred amidst a turbulent period, with disappointing retail sales figures and online competition pushing some brands out of the market.
“[This is] a situation which few would have dared to forecast given the headwinds facing the retail sector,” says Wizel, noting low wages growth and significant rises in household costs.
Wizel points out that while the total effects online competition has caused are not yet known it has, in some ways, had some positive effects on the retail industry; including greater creativity on the part of Melbourne’s retail management teams.
“One could quite easily argue that there has been some complacency in the sector that online retail competition has exposed and that may, ironically, underpin its survival,” said Wizel.
“That includes some astute remixing of the retail offer with the recognition of the need to attract the public back into these centres.”
Melbourne’s rapid population growth, with forecasts of more to come, was noted as a key factor behind the strong sales results.
Justin Dowers, state director retail investments, noted that buyers had recognised that shopping centres sit on some of the most valuable land in their respective regions, which “down the track, may provide enormous development upside as local governments seek to maximise city land use.”
“The underlying value that these properties offer, therefore, adds significantly to the current income stream and so a relatively passive investment also has the potential to become a long term development option.”
Dowers went on to point out that investors are attracted to the non-discretionary focused tenancy profiles of these centres, and their ability to perform long-term, regardless of challenging economic conditions.
Flinders Lane back in fashion
Women’s fashion designer Tiffany Treloar has leased Shop 6, 288 Flinders Lane within the prime section of the strip for a 3+3 year deal.
Fitzroys agency executive James Spencer negotiated the deal at circa $190,000 per annum gross, and note that Tiffany Treloar had been looking to enter the prime retail location for some time.
“The foot traffic benefits from Flinders Lane, Elizabeth Street Degraves Street and Centre Place was the main driver for the strong interest and result achieved,” said Spencer.
“High quality retail and food and beverage offerings have driven a lot of people into the area and now you can really feel a buzz along Flinders Land and Degraves Street.”