Specialty retailers are enjoying stronger sales in CBD shopping centres rather than their suburban counterparts, according to new data from property advisory firm Urbis.
The annual Urbis Retail Perspectives report found that specialty stores in CBD centres averaged sales of $10,969 per square metre in the 2009-10 financial year, compared with $7,055 for specialty stores in suburban centres.
According to the survey, CBD retailers in capital cities benefit from high levels of daytime foot traffic that even the best suburban shopping centres cannot match.
The report states: “Residential populations in inner cities have been growing steadily. Employment and tourism growth in the CBDs are accelerating, public spaces have been invigorated, retail developments are underway in all urban downtowns, and international brands have either already arrived or their arrival is imminent.”
Urbis co-director Jeff Armstrong says specialist stores that typically do well in CBD shopping centres are fashion oriented.
“CBD centres are highly focused on fashion and discretionary items, so a lot of start-up fashion boutiques in the CBD find it easier to find a niche in the market,” he says.
But Armstrong says fresh food retailers are much better off in suburbia because the CBD doesn’t lend itself to regular, everyday shopping.
Looking forward, Urbis believes inner city populations will continue to increase, which is good news for specialist retailers in CBD shopping centres.
“The Melbourne 2030 and Sustainable Sydney 2030 plans both set targets for increasing residential populations in the inner city areas, with less reliance on private vehicles and greater emphasis on public transport,” it says.
“Other factors will lend a hand. For example, tertiary education is now among Australia’s largest export industries and the inflow of international students will be concentrated in the cities where many of the university campuses are located.”
Urbis predicts there will also be significant opportunities for new retail floor space.
“For example, the closure or downsizing of bank branches and post offices creates space that needs to be repurposed. Obsolete retail space can also be renovated,” it says.
“As with any retail project, the scale and tenant mix need to fit the market, accessibility and navigability must be good, and design and ambience must be compelling.”
Urbis says there are some additional factors that must be taken into account:
- Proximity to the retail core. Developments that are inside the retail core will typically perform better than those located outside, even by a short distance.
- The location of retailers in areas of high natural pedestrian flow is one of the most critical factors ensuring CBD retailing success. Without an existing ant track, a CBD property will struggle to create one for itself.
Design elements for CBD projects often need to be more innovative than for a suburban shopping centre.