Australia’s retail space much tighter than US: report
The struggles of US retailers cannot be directly translated to the Australian market as American cities are swamped with physical retail space while retail space in local capitals is still constrained.
A report by CBRE shows that while local department stores may be struggling and some are beginning to hand back space, they are also unlikely to drag down their landlords.
Despite high-profile campaigns for rent cuts by Solomon Lew’s Premier Investments, landlords have focused on plays like putting a co-working operator into Emporium Melbourne when Myer’s lease expires next year.
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The report shows that Australia is still overstocked with department stores but they only account for about 25-35% of space in subregional and regional centres.
In the US they typically occupy more than half of the space in comparable malls.
It says the US, at 5sqm of retail space per capita, is significantly more overstocked with retail space than Australia, at 1.6sqm per capita.
With department store retailers paying reduced rents — about $280 per square metre — compared to specialty outlets at $1700 a square metre, landlords could refresh centres and drive income growth.
This article originally appeared on www.theaustralian.com.au/property.
