CAROLYN CUMMINS August 11, 2012
SYDNEY'S central business district has been inundated by removalist vans after the completion of a number of key retail leasing deals as part of a major tenant reshuffle.
The activity comes amid a mixed outlook for the CBD's retail sector, with the luxury end seemingly defying the odds while the small to medium shops struggle.
Cautiousness by consumers in the more discretionary fashion labels has made some tenants decide not to renew a lease, with the space being taken over by retailers selling technological devices.
The new variety of tenants is an indication that CBD retailing has changed structurally to accommodate the new-look shopper.
Food, health clubs, express hairdressers and nail bars are the new tenants, with traditional fashion, shoe and department stores trying to keep up.
In Sydney, the rents in the CBD at the luxury end have held their own, although there have been suggestions that incentives in lease renewals are being offered.
Westfield, which owns the new centre in Pitt Street Mall, reports its half-year results next week and is expected to show a rise in sales across the new property.
JP Morgan's real estate analysts have predicted that the group's net operating income growth expectations in Westfield's key Australian and US markets are 2 per cent to 3 per cent for the full year.
''At the first quarter, we saw specialty-store rent growth of 3.1 per cent year-on-year in Australia, and in the US [it] was up 4.1 per cent,'' the brokers said.
''Comparable specialty sales growth was a weak 1.1 per cent in Australia, which was in stark comparison to the 10.1 per cent in the US.''
The director of retail leasing at Knight Frank, Alex Alamsyah, said despite the doom-and-gloom comments from retailers, property agents and consultants, prime Sydney CBD was still going strong.
''In August-September and October-November, Sydney's CBD is going to be busy with the opening or reopening of several key retailers,'' Mr Alamsyah said.
One of the key leases is the new Fit n Fast gym in Westfield Sydney. It is the budget chain created by the founder of Fitness First, Tony de Leede.
It will open in the former Borders bookshop of about 2000 square metres. It is currently being developed, with plans for a September launh date. The latest big-name retailer is the Topshop/Topman in the former Gowings property. Mr Alamsyah, who worked on the lease, said the store would open on October 3, while QT Hotel would open next month.
Aside from the recent opening of Hugo Boss in George Street, TM Lewin, the London-based bespoke apparel retailer, will open its Sydney store next month at 129 King Street.
Another new stand-alone entrant is the Chinese jeweller Lao Feng Xiang, at 60 Castlereagh Street. Mr Alamsyah said Shanghai Laofengxiang Co Ltd was kicking off its overseas expansion with the opening of the boutique in Australia.
''The store opening marks the brand's first direct-sales store outside of China since it was founded in 1848,'' he said.
At 66 King Street, the Finland-based Marimekko continues to expand following the opening of a flagship store in New York last year and in Hong Kong earlier this year. It is aiming for a December opening.
In Pitt Street Mall, the MidCity Centre has signed up the Brisbane-based streetwear brand Culture Kings. The business is taking over the former Chemist Depot site in the MidCity basement and plans to open before Christmas.
At the other end of the scale is the first Australian Christian Dior flagship store, which is under construction on the corner of King and Castlereagh streets.