Two retail strips in the heart of the western suburbs have reduced their vacancy rates during the past 15 months despite the rise of online shopping.
Two retail strips in the heart of the western suburbs have reduced their vacancy rates during the past 15 months despite the rise of online shopping.
Retail vacancies on Claremont’s Bay View Terrace strip have more than halved since June last year, driven by an increase in services tenancies.
Research by Ray White Western Australia shows a fall in the vacancy rate from 10.2 per cent to 3.8 per cent in August, meaning just 335 square metres of vacant space remains across three properties.
The ‘Perth Retail Strips’ report attributed the improvement to a rise in the services sector, which now accounts for more than a fifth of all tenancies on Bay View Terrace.
There was a slight drop in the proportion of space taken by clothing stores, which remains the dominant profile, to 26.1 per cent.
“In terms of the leasing rates in this region, we have witnessed very little activity along Bay View Terrace, which is testament to its low vacancy; this area is dominated by Claremont Quarter,” the report stated.
“Recent evidence has shown that rents can vary considerably and may achieve up to as high as $2,000/sqm net, depending on size of tenancy, location and term.
“Demand remains high for investment for assets in this strip location, which continue to be tightly held, yields remain in the 6 per cent range.”
Meanwhile, a few kilometres south along Stirling Highway, the vacancy rate on Napoleon Street in Cottesloe has also been cut, in this case to 4.1 per cent.
The street benefited from an increase in food retailing, which now accounts for nearly 16 per cent of all shops.
Clothing represents more than a third of retail space on Napoleon Street, with female fashion making up nearly 80 per cent of those stores.
Rents are anticipated to remain between $650 and $700/sqm, according to the report.
Ray White Commercial WA manager Brett Wilkins said the Cottesloe retail strip had continued its reputation as a fashion hub.
“Napoleon Street has always had a low vacancy rate but in 2018 this is even lower; and if it wasn’t for a few isolated owners the vacancy rate would be close to zero,” he said.
“Cottesloe, like Claremont, is in my opinion undersupplied with retail strips for the population catchment and consumer spend available.”
Despite the strong results in Cottesloe and Claremont, Rokeby Road in Subiaco suffered a big jump in its vacancy rate, from 5.9 per cent to 15.2 per cent in August.
The report found several premises currently available for lease between $280/sqm and $550/sqm.
“Challenging retail conditions have resulted in the demise of a number of longstanding tenants including Esprit, the iconic Witches Cauldron has also closed its doors after 48 years of trading and Daneechi Swimwear having closed in mid-2018 after 30 years,” the report said.
However, Mr Wilkins believes a pro-business council and future developments, including the Subiaco Oval, Princess Margaret Hospital and Pavilion Markets sites will lead to improving conditions in the precinct.
Further north in Leederville, Oxford Street registered a slight rise from its previous zero vacancy rate to 2.4 per cent.
The street is dominated by food retailers, which comprise nearly 60 per cent of all shops.
“Oxford Street is a highly regarded retail location and has managed to remain strong despite the emergence of revitalised retail strips of Angove Street, North Perth and Scarborough Beach Road, Mt Hawthorn,” the report stated.
Mt Lawley’s Beaufort Street also recorded an increase in the vacancy rate, to 12 per cent, up from 9 per cent in June last year.
“In a similar trend witnessed in Rokeby Road, rents have tended to level off around the $600/sqm market for prime tenancies,” the report said.
“However, there is a significant amount of secondary stock, which is proving difficult to lease in the current market below this level.”
