Indicative retail rents in Melbourne prime and ‘super prime’ (Bourke Street Mall) markets are surpassing comparable Sydney indicative rents.
In Sydney the indicative rent for super prime (Pitt Street Mall) space dropped 6.2 percent in Q4 2011, according to CBRE. It is Tthe first drop in in 10 years, leaving the CBD’s indicative rent quoted at $7,560 per sqm per annum net.
This level remained stable in Q1 2012, but put Sydney below Melbourne’s indicative rent of $7,700 per sqm per annum net.
The indicative level of rent was more typical of what retailers would pay, says CBRE executive director of global research and consulting, Kevin Stanley.
“It’s important to note that if you look at the highest achievable rents, Sydney continues to outstrip Melbourne,” Stanley says.
“The highest super prime rent quoted in the Sydney CBD market is $11,560 per sqm per annum net, which is still 33 percent above the equivalent in Melbourne”.
Prime typically represents areas around pedestrian malls, Pitt (Sydney) and Bourke (Melbourne). In these locations, indicative rents in Melbourne are now 18 percent above those of Sydney: $3056 per sqm per annum net in Melbourne and $2,496 per sqm per annum net in Sydney.
“Similar to the change in super prime rents, it’s the 16 percent fall in Sydney’s prime rents over the last couple of years which has helped put Melbourne ahead,” Stanley says.
While total retail vacancy rate in Sydney and Melbourne remains low, it has increased slightly. Sydney’s most recent vacancy rate of 3.10 percent is up from 0.60 percent in late 2009.
Stanley says the 3.10 percent rate in Sydney was the 10 year average, but the increase from a low point in 2009 had caused some stress on rents.
In Melbourne Stanley says the total vacancy rate is lower at 2.5 percent, but high enough to stop rents growing.
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