Top brands to expand to suburban, mid-tier shopping centres

FASHION giants Zara, H&M and Uniqlo are expected to unleash another wave of stores away from the CBD, expanding to high street and mid-tier suburban shopping centres.

Japanese clothing retailer Uniqlo has been a hit with shoppers since its Australian launch.

LANDLORDS of mid-tier suburban shopping centres and the high street will be the next wave of investors to benefit from the surge of international retailers seeking a Melbourne footprint, analysis suggests.

CBRE’s latest Viewpoint report says global brands “expanding in the Asia Pacific have made Australia one of the most sought-after markets on a per capita basis”.

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CBRE head of Victorian retail leasing Zelman Ainsworth said the agency was receiving inquiries from offshore retailers considering setting up in suburbs such as South Yarra, Prahran and St Kilda.

“Mid-tier malls that can offer larger and less expensive floor space, flexibility and the envelope these retailers seek will be the ones most likely to attract these tenants in future,” Mr Ainsworth said.

Fashion giant H&M is expected to lease locations at smaller suburban centres.

“Big-spending consumers are happy to shop in smaller locations that are familiar to them, so long as they can buy up-market brands.”

In the four years to 2016, Melbourne ranked in the top 10 markets chosen by some of the 2000 retailers — almost 75 per cent of which are from Europe and the US — who have settled in the region.

Melbourne attracted 46 global entrants during the period — more than any other Australian city.

But while fashion giants such as Zara, Uniqlo and H&M and luxury brand retailers have mostly focused on leases in the CBD and mega-malls such as Chadstone Shopping Centre, CBRE expected future rollouts to increasingly target smaller centres.

“Brand entry into the Australian market is expected to continue over the next three to five years, albeit at a slower pace than the past two years — potentially equating to 1.2 million square metres,” the CBRE report said.

The “Asian spending factor” was a phenomenon driving the higher-end retail brand expansion around the world and in Australia, Mr Ainsworth said.

“These retailers are responding to the demands of well-off consumers migrating to countries such as Australia and expecting to find the luxury brands they are accustomed to buying in their original home,” he said.

He added that another trend benefiting smaller retail landlords, especially in the CBD, was high-end brands shirking large flagship stores in favour of taking up to six smaller leases in a city.

The CBRE report said despite the influx of foreign retailers, Australia had a relatively low penetration rate of 30 per cent compared with more than 45 per cent in Singapore, Hong Kong and the UK.

“By global standards, Australia’s market is relatively unsaturated, with a lack of products and services in some geographies meaning international retailers don’t face the same competition,” CBRE said.