By Emma Young
As Perth retail strips, particularly Subiaco and Mt Lawley, struggle in a weak economy, food retailing is gaining dominance and cheap easy parking remains vital, new research shows.
Ray White commercial research division’s latest report into retail strips in Claremont, Cottesloe, Subiaco, Leederville and Mt Lawley-Highgate showed major changes in vacancy rates over the past 15 months.
Subiaco's strip is dead quiet as once well-known sites sit empty. Credit: Emma Young
Subiaco suffered most, with an increase in vacancy rate to 15.19 per cent after recording 5.94 per cent last June, after many business closures and relocations.
“Challenging retail conditions has resulted in the demise of a number of long-standing tenants including Esprit, the iconic Witches’ Cauldron [which] has also closed its doors after 48 years of trading ... and Daneechi Swimwear ... having closed in mid-2018 after 30 years,” the report said.
The number of clothing and soft goods stores along the strip had contracted, as had food and cafes and restaurants, but services had remained consistent with health, financial, property, beauty and admin services remaining in the area.
The market remained challenging, with steady turnover of tenants, and previous rents of around $600 per square metre were now a barrier, with some rents having dropped to $280-$550 per square metre.
The report said the strip would naturally reposition over time and “find a new tenant mix at more sustainable rental levels.”
“We are confident that Rokeby Road will start to improve with a pro-business council, and future redevelopment of the football oval and PMH,” the authors said.
“The recent sale of the Subiaco Markets site has been highly anticipated as has the future redevelopment of this site; together with the move of Coles from Barker Road to new premises at 44 Station Street will bring a greater focus toward the northern end of Rokeby Road and Subi Square.”
Mt Lawley-Highgate’s vacancy rate also increased to 12.03 per cent.
The report said that in a similar trend to that witnessed in Rokeby Road, rents along the cafe and restaurant-dominated strip had tended to level off around the $600-per-square-metre mark for prime tenancies but there was a significant amount of lower-level stock proving difficult to lease in this market.
An artist's impression of the new markets planned for the old Subi markets site. Credit: Blackburne Property Group.
But Bay View Terrace, Claremont, had managed to reduce vacancy from 10.16 per cent to 3.78 per cent thanks to an increase in service tenancies such as banks and real estate.
Women’s fashion still dominated the area, with rents as high as $2000 per square metre and demand remaining high.
Napoleon Street, Cottesloe had a good result, reducing vacancies to 4.14 per cent from an already low base of 6.16 per cent thanks to more food retailing.
But the strip’s identity as a fashion hub remained dominant and rents were anticipated to remain in the $650-$700 per square metre range with investment demand still strong.
Star performer Leederville increased its vacancy rate from zero with closures including veteran businesses Oxford Street Books and Black Plastic, but it still boasted the lowest vacancy rate at just 2.39 per cent.
The “eat street” market was now almost 60 per cent retailing specialty foods, cafes and restaurants.
“Oxford Street is a highly regarded retail location and has managed to remain strong despite the emergence of revitalised retail strips of Angove Street, North Perth and Scarborough Beach Road, Mt Hawthorn,” the report said.
A sweet but sad sign in the window at the now-closed Oxford Street Books.
“The cuisines are well split across Modern Australian, European and Asian fare, making it a revisited location ... addition of more casual and take away options also highlights the differing price point levels also on offer catering for a wide dining market. This quality mix has served Leederville well over this survey period with leasing and sales evidence near non-existent, highlighting the attractiveness.”
The report said all Australian retail markets were under pressure, with the proliferation of online shopping driving the deaths of many retailers over the past decade, but WA’s “fundamental poor economic condition” had exacerbated its situation.
Over the past few years there had been strong reduction in retail trade growth, most notably for “discretional goods”, with people saving more and spending less on non-essentials.
The increased competition had driven changes to retailing, including a focus on “experience-based retailing”, with shops and strips trying to provide more in-store entertainment, activities and education to attract people.
The report said the shift to convenience-based retailing around food had been key to many centres and strips, and parking continued to be of growing importance, particularly for strips relying heavily on providing easy and free access for customers.
But encouragingly, there had been an improvement in employment locally that had highlighted upward growth in economic fundamentals for WA.
All economic forecasts were for WA to soon “once again become the economic powerhouse of Australia”.
“Looking ahead, the retail mix will be key to attract and retain tenants however rents will need to remain competitive to keep strips vibrant,” the report said.
A JLL report from Q1 2018 showed City of Perth retail vacancies have been recorded at 10.8 per cent.