A SHORT supply of big retail spaces in the CBD is hampering plans by two of Europe’s top fashion chains to set up shop in Perth and reap the benefits of the state’s long-term economic outlook.
Zara and Topshop are both understood to be seeking suitable properties in the city but their requirements for large floor spaces in high-profile locations have proved a stumbling block for the fashion giants, despite the launch of a number of new retail projects in the city in recent years.
Spanish fashion phenomenon Zara already has outlets in Sydney and Melbourne and it’s close to opening the doors of its third store, in South Australia.
The Adelaide boutique will cover 2,300 square metres over two floors in the Burnside Village redevelopment and feature a glass lift, modelled on Zara’s Fifth Avenue boutique in New York.
The former Borders Bookshop store has been suggested as one city site that could be big enough to support either a Zara or a Topshop but the location would also have to meet a number of other stringent criteria, such as profile, exposure and street frontage.
Retail property specialist Jim Tsagalis said both the labels had forged a presence on the east coast and they needed to expand their network to make that investment work for them.
“They have a backbone of infrastructure in the Australian market … they are in a cycle for their businesses where they need to expand to pick up on a lot of fixed overheads,” said Mr Tsagalis, who is managing director of Lease Equity.
“If the climate is such that it’s difficult it also means the commercial terms they can get are better but, having said that, both of those particular organisations need parameters that are difficult to get.”
Continued interest in the CBD from major global brands is at odds with the historically weak consumer spending, which claimed another scalp this week, with Australian clothing chain Satch calling in the administrators.
But retail property analysts claim it’s symptomatic of the uneven performance of the sector as well as the changing nature of CBD retail.
The Satch move follows the closure of a string of high-profile retail businesses this year, including middle market fashion labels Colorado, Brown Sugar, book chain Borders and high-end fashion label Bettina Liano. Among the sea of red sale signs and unleased shop-fronts, a handful of high-profile brands like Apple can’t seem to keep up with the demand and lease inquiries from new food and beverage operators are still strong.
Mr Tsagalis said it was part of the broader evolution of the city, driven in part by the work undertaken for the Commonwealth Heads of Government Meeting (CHOGM) next month and the maturation of the city’s hospitality scene.
“All of a sudden people who haven’t been to the city will see this rejuvenated shopping environment but also some new retail and it won’t all be fashion but it’s going to be fashionable, fashionable food, fashionable alcohol, fashionable venues,” Mr Tsagalis said.
“People are happy to feel good about what they are going out for, a meal and a drink rather than buying a frock, shoes or a suit, so we are seeing disproportionate growth in food and beverage.”
In terms of the leasing deals, Mr Tsagalis said the core activity had been clustered above the $650,000 per annum mark but more generally retail rents had flattened.
The performance of the Apple shop on Hay Street is understood to have caused a number of international retail brands to adjust their expansion strategies to include Perth.
But more broadly, CBRE retail services associate director Fred Clohessy said CBD retail rents were either flat or trending down and incentives were on the rise.
“It’s an interesting market because all the fundamentals are still saying retailers should open in Perth but middle range (price point) fashion is doing it tough,” Mr Clohessy said.
“And the problem we have in Perth is most of the decision makers and headquarters for Australian fashion operators are in Sydney and Melbourne and the spend on retail in NSW is dismal so … getting them to expand or open a new store in Perth is proving difficult because of that.
“It’s a funny market because there are some big-name retailers looking at coming to Perth and yet you are hearing that some of the Australian retailers are having second thoughts.”
