Sydney’s Pitt Street Mall has been named the seventh most expensive shopping precinct in the world, as rent prices in Australia’s hottest retail locations begin to “soften” thanks to the rise of online shopping.
Cushman and Wakefield’s long-running Main Streets Across the World report revealed Pitt Street Mall’s yearly rent per square metre to be a whopping $14,000, meaning a store in Pitt St Mall with a square meterage of 500 would expect to pay over $7 million in rent per year.
Coming in first on the global list was Hong Kong’s Causeway Bay, with a yearly rent per square metre of $38,500, and second on the list was New York’s Upper 5th Avenue, with a similar yearly rent per square metre of $32,300.
Despite these mind-bogglingly high rents, Cushman and Wakefield report the retail rental market has seen a general softening over 2018 due to the effect of online retail. The real estate services company said in the report rents in CBD strip retail areas in Australia have “notably softened”.
“As one of the world’s more mature retail markets, Australia has seen strong growth in online, which is beginning to impact on traditional retail,” the report reads.
“However, rents in higher footfall locations have held firm, although George Street in Sydney has recorded significant rental growth on the back of the forthcoming light rail project.”
When it comes to the Asia-Pacific region, Australia puts up a strong showing when it comes to rental costs, with three local locations coming in the top 10 for the region.
Melbourne’s Bourke Street Mall comes in sixth in the region with a yearly rent per square metre of $7,000, and Brisbane’s Queen Street Mall comes in eighth with a yearly rent per square metre of $4,500.
SMEs have regularly mentioned to SmartCompany rents are one of the greatest pain points in their business, with retailers regularly faltering due to endlessly increasing rental costs.
Sydney’s high rent costs have been slammed specifically by small business owners in the past, with Jacqueline Major, the owner of Sydney retailer Oz Resort, telling SmartCompany earlier this year she was forced to relocate her store to a warehouse after her rent costs for Sydney’s North Shore began to exceed $130,000 a year.
“I don’t know one retailer, except for those big brands with multiple retail stores, that can sustain these rents,” she said at the time.
Recent retail collapses such as that of menswear retailer Roger David have also been attributed to rental costs, and big name players such as Target and Premier Investment have begun to commit to a strategy of finding lower rental costs for their brands.