Sydney CBD retail space "grossly undersupplied"

The Sydney CBD may boast one of the most expensive retail strips in the world - Pitt Street Mall - and attract some of the biggest international fashion brands but new research has found that they city has a severe shortage of retail space.

According to Colliers International, retail in the Sydney CBD is "grossly undersupplied”, with only just 18.5 square metres per resident - the lowest in the country.

chart-of-the-week-nov-6

Source:  id Consulting, Deloitte Access Economics, Colliers International

Adelaide had Australia’s highest retail floor space per resident with 47.2 square metres per resident, 255% higher than Sydney.

But that shortage of retail space in the Sydney CBD is expected to change. Colliers suggests that the growing demand from international retailers, increasing city residential developments, combined with the current shortage of retail space is expected to drive the need for retail development.

The head of retail at Colliers, Michael Bate said its research had shown that "around 65,000 square metres of new retail space was planned for the city’s heart".

He believes that revitalised CBD retail precincts will be the next revolution for retail in Australia, buoyed by what he sees as a "second wave" of international retailers heading to our shores.

"With the development of so much space in the Sydney CBD, don’t be surprised if you see another wave of international brands on our doorstep, particularly a whole new range of luxury brands who are finding Australia an increasingly attractive market, " said Mr Bate.

The report identified three main categories that were driving demand for retail space in the CBD.

One was the ongoing trend of residential development in cities across Australia.

Based on its estimates, the Sydney CBD is expected to grow by more than 10,000 people over the next decade.

The other driver, it cited was the number of workers populating the city during the day.

"Sydney’s 240,000 CBD workers are supported by around 1.9 square metres of retail space per person, which is a similar ratio to Melbourne," Colliers said. "Only Perth has a lower ratio at just 0.8 square metres of retail space per worker".

However, Sydney’s worker population was expected to increase by around 58,000 people over the coming decade, putting a further squeeze on retail space, it added.

Tourists made up the third category of CBD retail users.

"With international visitor numbers to Australia increasing by 5% in 2013, the retail needs of tourists will continue to grow in line with these visitor numbers," Colliers said. It highlighted that the number of Chinese visitors in the 2012/2013 financial year grew by 17.4%, “a market that will continue to drive retail demand in the country’s CBDs".

 

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