Retail vacancy has risen in prime and secondary retail strip properties in Sydney over the year to June 2012, according to Herron Todd White research.
The research says capital values have started to fall, following rental reductions.
The report, Q2 2012 Retail Market Link – Sydney, says weak retail spending has forced retailers out of the market, with tenants unable to absorb increasing occupancy costs at a time of decreased turnover.
Prime strips have seen the biggest vacancy increases. Oxford Street prime retail vacancy rates have increased from 7.5 percent at June 2011, to 22.3 percent in June 2012.
The report says secondary markets have not seen the same increase in vacancy, but this is because they have “already climbed to dizzying heights in the past two years”.
Campbelltown and Parramatta vacancy rates are at 15.9 and 11.1 percent respectively, but face increasing competition from nearby regional shopping centres.
CBD super prime strip vacancy remains at 2.3 percent. The report says prime properties in the CBD continue to benefit from strong demand.
as at June 2012
|CBD super prime
Source: Herron Todd White research
Looking ahead, the report says the retail strip market is ‘in for a tough year over 2012’ - consumer constraint is expected to continue to limit sales growth, resulting in an expected downsizing of retailers.
Vacancy increases are expected, which will result in prime and secondary rents under pressure.
“The one exception to this rule is super prime properties within the Sydney CBD, which we believe will remain in strong demand from international and national retailers alike,” the report says.