Retail strip vacancy rates decline as real estate market rebounds

Perth’s rebounding residential real estate market has led to decreasing vacancy rates for retail strips across many of the city’s suburbs.

Ray White Commercial head of research Vanessa Rader said the Perth retail strip market had shown robust levels of rebound in what appeared to be a post COVID-19 economy for Western Australia.

She said this trend could be seen across five popular Perth retail strips at Bay View Terrace in Claremont, Napoleon Street in Cottesloe (pictured above), Rokeby Road in Subiaco, Oxford Street in Leederville, and Beaufort Street in Mt Lawley.

“Across our five retail strip locations, all have shown sizable increases in residential house prices, most notably in Cottesloe which has seen median house price growth of 29.21 per cent to $1.86million,” Ms Rader said.

“This attractive location has seen a 63.83 per cent increase in house sales with this strong interest also translating to quality retail results with a zero vacancy factor recorded this period.

“While COVID-19 has impacted retail at large, we can see most of the retail strips we have surveyed showing signs of rebound.

“While some locations such as Claremont and Cottesloe continue to feature high levels of clothing and soft goods, a sector in decline for most retail destinations, the potential to improve in the food retailing segment for these, and other strips, continues to be high.”

Ms Rader said vacancies had declined across four out of five of the surveyed retail strips, with Claremont being the location to experience an increase in vacancy rates.

Claremont’s Bay View Terrace retail strip is currently experiencing a vacancy rate of 7.23 per cent, while Napoleon Street in Cottesloe sits at 0 per cent, Rokeby Road in Subiaco sits at 11.38 per cent, Oxford Street in Leederville sits at 12.95 per cent, and Beaufort Street in Mt Lawley sits at 10.63 per cent vacancy.

“Across all five locations we have surveyed 365 shop fronts, which represents over 54,000sqm, and the overall vacancy rate was 9.56 per cent, down from the 12.09 per cent recorded in 2020 and 11.24 per cent in 2019, yet well behind the 6.94 per cent vacancy rate recorded in our first survey in 2017,” Ms rader said.

“There has been a structural change in the way which much of the population interacts with retail strip shopping prior to the COVID-19 pandemic including a decline in segments such as clothing, soft goods, and recreational goods as they become more accessible online.

“However, despite this broader shift, markets such as Cottesloe, which featured no vacancy, have continued to buck the trend and thrive with a strong weighting to these segments.

“Food retailing and services, however, remain those sectors which often require higher physical patronage levels and are instrumental in the improvement of some strips in our survey.

“Ongoing local developments, which will aid in growing vibrancy across our surveyed areas, will also prove to positively influence retail mix, improving occupancy.”

Ray White Commercial WA senior commercial property advisor Brett Wilkins said things continued to look up for Perth’s retail strips.

“Oxford Street in Leederville will improve dramatically with the completion of ABN House at 301 Vincent Street, with 900 employees now working there, eating, drinking and shopping on Oxford Street,” Mr Wilkins said.

He said Napoleon Street, Cottesloe, continued to be outstanding with no vacancies at the time of survey.

“Napoleon Street continues to be the go-to for fashion which represents 33.6 per cent of the total floor space,” he said.

“Bay View Terrace in Claremont is generally strong, but there are several owners who refuse to meet the market and their properties remain vacant for many years in some cases.

“There has been excellent demand from investors with Ray White Commercial selling 10 and 44 Bay View Terrace this year

Mr Wilkins said Rokeby Road Subiaco was mixed and still had pockets of vacancies.

“But I predict a great future as Subiaco East is developed over the next decade and One Subiaco is finished next year,” he said.

“There will be over 2200 families moving into Subiaco over this period which will all help Rokeby Road going forward.”

Mr Wilkins said Beaufort St, Mt Lawley, had suffered in recent years but was bouncing back in 2021.

“This year has started to see a turnaround in the strip with the opening of The Elford Hotel and the redevelopment underway of the old Flying Scotsman by the Three Pound group into a multi-storey hospitality venue,” he said.

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