Retail zone shrinks in Surfers Paradise after brands abandon fringe streets for shopping centres

RENTS are high and vacancies are low for businesses in central Surfers Paradise but not everyone is happy. Something big has changed which has big implications for the business community.

Holiday crowds on Cavill Ave.

RETAILERS have sharpened their focus on three key streets of Surfers Paradise, deserting the fringe areas and potentially changing the face of the tourist-magnet suburb.

At the epicentre of the glittering hub of Surfers Paradise — in Cavill Ave, The Esplanade and part of Surfers Paradise Bvd — commercial rents are high and vacancies are low.

But just one street over in Elkhorn Ave the shops have vanished, and landlords can expect rents up to 75 per cent lower than their counterparts a stone’s throw away.

The retail industry squeeze and renovations in major shopping centres have seen shops desert the fringes of Surfers and contract to the high foot traffic areas.

Luxury brands including Hermes, Gucci, Louis Vuitton and Prada left their long-time Elkhorn environs for the new look Pacific Fair, leaving empty shells behind them.

Taking the place of the shops are professional services businesses real estate agents, developers, marketing agencies and others.

Despite the shift, CBRE’s Rudi Scutti said competition for retail space in the three-street sweet spot was hotter than he’d seen it in years.

Mr Scutti brokered the lease on the new Sunglass Hut store in Cavill Mall, where rents are between $1600/sqm and $4500/sqm and vacancies are at pre-GFC lows.

For comparison, space on Elkhorn Ave and other fringe streets is lucky to top $600/sqm.

Prime spaces in Surfers Paradise are in demand, with new tenants including Sunglass Hut paying top dollar for a spot in the heart of the tourist strip. CBRE Advisory and Transaction Services Manager Rudi Scutti at the new Sunglass Hut store in Cavill Mall in Surfers Paradise. Picture: Jerad Williams

Sunglass Hut snapped up the 39 sqm prime site, which was available for the first time in 20 years, after a leasing campaign which attracted over 100 inquiries and multiple offers.

“The nature of such prime site brought a lot of tenants to the table, Sunglass Hut being a global company offered a far better covenant,” Mr Scutti said.

“In a changing retail environment, the tenant’s ability to meet lease commitments have a strong weight on any client’s decision.

“Retailers are after location, profile and affordability. In Surfers Paradise, we have a 5 per cent vacancy rate on prime strips such as Cavill Mall and 40 per cent vacancy rate on fringe areas like Elkhorn Avenue.

“On the prime strips we are seeing low vacancies, quicker lease-up period and a higher strike rate on renewals.”

Recent brands that have renewed their leases at prime spaces include Footlocker, Adidas and Surf Dive n Ski, with new entrants being Sunglass Hut, Grill’d and 8 Street.

Mr Scutti said 54 per cent of inquiries he fielded for the area were for food and beverage, with just eight per cent for fashion and 16 per cent for retail services.

“The high traffic, high visibility areas will always thrive, as long as the rent’s right, they will make money.”