CBD retail rents rise

The Perth CBD retail property market remains strong with rents up in the December quarter on the previous year, according to research from CB Richard Ellis.

Rents for super prime retail space in the CBD – around the Hay Street and Murray Street malls – reached $3,950 per square metre in the December quarter, based on a tenancy of between 70 and 100sqm.

This was up 16 per cent from the $3,400/sqm achieved at the same time in 2006.

Rents in prime space along King Street are also strong, between $2,000 and $2,500/sqm.

The King Street area has continued to attract luxury brands, with jeweller Tiffany & Co the latest company to have moved to the retail strip.

WA Business News understands the company is expected to complete a fit-out of its store within the next two to three months.

CB Richard Ellis research analyst Michael Olsen said conditions were very strong, as were market fundamentals.

“The major issue with CBD retailing at the moment is an undersupply of space, because demand has been at unprecedented levels,” he said. 

Over the next three years, between 30,000 and 35,000sqm of retail space in the CBD is expected to come onto the market.

The majority of this will be contributed by the GPO building, Century City, Raine Square and 140 William Street.

“Most of the new supply is mixed-use developments, following where the new office supply is coming on,” Mr Olsen said.

He said the new space would alleviate demand.

“There is unlikely to be an oversupply because the new space is being met by demand, from either new retailers coming into the CBD, or existing retailers that are expanding. Some need more space, others are planning to open new outlets,” Mr Olsen said.

While vacancy figures were yet to be finalised for the quarter, Mr Olsen said they remained very low, with rents in some areas expected to rise.

“We think we’ll see rents increase, particularly at the western end of the city on Hay Street and Murray Street,” he said.

While there was much speculation about the impact in WA of the US sub prime crisis on retailing, it remained to be seen what the effect would be, according to Mr Olsen, with a softening in yields the most likely impact.

CB Richard Ellis senior negotiator Martin Tavra said rents in the area between William Street and Milligan Street had probably doubled in the past year.

He said he was aware of 15 retailers seeking to locate in that area.