LMW Link ~ Inner Brisbane Strip Retail
Inner Brisbane Strip Retail Vacancy Study
For more information
Helen Swanson
Paul Robbins
Queensland Research Director
Managing Director – Brisbane
[email protected]
[email protected]
0456 441 375
0408 073 239
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LMW Link ~ Inner Brisbane Strip Retail
Overview
A burgeouning population base in Brisbane’s suburban districts throughout the 1980s and 90s saw
the evolution of large free standing shopping centres. During this period shoppers flocked to these
new suburban neighbourhood centres with their modern facilties, better car parking and a full range of
shopping services under one roof. However, more recently the transformation of Brisbane’s inner
fringe suburbs as eclectic, lifestyle driven, apartment enclaves has provided the opportunity for retail
strip centres to cater for a new emerging demographic. Consequently a survey of several inner fringe
retail strip centres throughout Brisbane has revealed tight vacancy rates and the emergence of new
and diversified retail offerings.
With vacancy rates remaing relatively tight amongst most inner Brisbane strip centres and population
growth strong, smaller retail strip shops particularly those that are service orientated are once again
becoming a proven haven for investors of commercial real estate. Currently, well located properties
along major thoroughfares offering a strong WALE are popular, as are those with the potential for
redevelopment to add value to the investment.
Future Supply
After several years of limited supply, we are now starting to see a new cycle of retail offerings added
to the inner Brisbane region. Driving this demand is an influx of population to these areas resulting off
the back of new medium / high density developments.
A graph showing future supply of retail planned in selected inner Brisbane fringe locations is shown
below. There is currently circa 63,405 sq m of future retail supply (with a floor area of above 300 sq
m) planned and or under construction across Queensland. The majority of this space at 37% or 23,641
sq m is located in Newstead/Fortitude Valley. Some of the major projects include the Newstead
Riverpark redevelopment, Newstead Circle Bunnings Project and Eagers vehicle showroms. Mirvac’s
Eagle Farm racecourse mixed use redevelopment will see the suburb of Ascot transformed into a
thriving urban precinct complete with food, beverage and retail offerings. Total retail space of 18,190
sq m or equivilently 28% will be developed in the Ascot / Hamilton region over the next few years.
Woolloongabba with 11,924 sq m of retail planned was slightly higher than that of Southbank’s
piepeline of 8,480 sq m. With various residential projects planned and or recently completed in
Milton there appears opportunity for selected retail opportunities to cater for the growing population
of this suburb. At present there is 2,345 sq m of retail planned and or under construction in Milton.
Brisbane Inner Brisbane*
Future Retail Supply (sq m) 2016 - 2020
Woolloongabba
Milton
Newstead/Fortitude Valley
Ascot/Hamilton
South Bank / South Brisbane
0
5,000
10,000
15,000
20,000
25,000
Source: Reed Cordells. *Ascot, Hamilton, Fortitude Valley, Newstead, Southbank, South Brisbane and Woolloongabba
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LMW Link ~ Inner Brisbane Strip Retail
Retail Strip Sales
Retail strip shops with a strong WALE remain in demand by private investors in Brisbane’s inner
region. Strong demand has consequenlty seen yields for these assets compress over the last 12
months by between 50-75 basis points. A convenience centre in inner Brisbane with a strong WALE
of five years plus can command sub 7.5% in some instances. A list of transactions to occur in the
various retail strip precincts analysed, is shown below. Private investors dominate the majority of
these transactions. Continued low interest rates, volatility in the share market and an achieveable price
point was a significant driver for investors keen to take advantage of the low risk many of the below
assets shown below could provide.
4 & 5 / 210 Oxford St, Bulimba
116 sq m Oxford Street retail strata investment
that sold for $1.325 million at a rate of $11,422 /
sq m in late 2014. At time of sale the property was
leased to Paleo Cafe Bulimba on a 5 by 5 year
lease that commenced in July 2014, providing a net
income of $96,050 per annum + GST reflects an
initial yield of 7.25%.
12 -14 / 20 Park Rd, Milton
Sold in April 2015 and known as ”Savoir Faire”
located two kilometres west of Brisbane’s CBD in
Park Road, Milton. A single level retail and
commercial complex that has five buildings
surrounded by common areas providing for a total
of 33 strata lots. Lots 12, 13 and 14, situated
fronting Park Road, sold in one line. Property is
leased to La Dolce Vita Restaurant on a new 20
year lease in November 2014 with a further 10
year option. The sale reflects a rate per square
metre inclusive of exclusive use area of $16,484 /
sq m and an initial yield of 7.14%.
20 Racecourse Rd, Hamilton
20 Racecourse Road, Ascot sold in July 2015 for
$3.5 million equating to $4,692 / sq m. The
property comprises a refurbished retail property
fronting Racecourse Road. It provides eight
tenancy areas. Seven carparks included. Property
sold fully leased with a WALE of 2.67 years
reflecting an initial yield of 6.01%.
18 Nash St, Paddington
18 Nash Street sold in April 2015 for $3.5 million.
The property comprises six commercial tenancies
and was sold fully occupied for an initial yield of
4.9%. The property is leased to Global Eyes,
Barham Chiropractic, Brisbane Yoga, Maryons
Shoes and River Chanel Australia. The property
was sold with a WALE of 0.73 years.
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LMW Link ~ Inner Brisbane Strip Retail
Vacancy Analysis
The below graph shows the vacancy rate (current as at April 2016) for various retail strip precincts
across inner Brisbane. 653 tenancies were surveyed across six retail precincts within inner Brisbane.
The blended vacancy rate across the six precincts was 6.28%. Racecourse Road, Ascot had the
highest vacancy rate at 9.09% and thereafter Brunswick St/China Town Mall with 7.81%,
Caxton/Given Tce, Paddington 6.09%, Grey and Little Stanley St, Southbank 5.49%, Oxford St,
Bulimba 4.59% and Park Rd, Milton, the tightest at 4.13%.
Inner Brisbane Vacancy Analysis (%)
as at April 2016
10.00%
9.09%
9.00%
7.81%
8.00%
7.00%
6.09%
6.00%
5.00%
5.49%
4.59%
4.13%
4.00%
3.00%
2.00%
1.00%
0.00%
Park Rd, Milton
Brunswick
Racecourse Rd,
St/China Town,
Ascot
Fortitude Valley
Caxton St/
Given Tce,
Paddington
Oxford St,
Bulimba
Grey St/Little
Stanley St,
Southbank
Source: LMW Research
Trends and Conclusions
Grey St,
South
Brisbane
Oxford St,
Bulimba
Caxton St,
Paddington
Racecourse
Rd, Ascot
Park Rd,
Milton
Dominant Industry Category
Brunswick
St, Fortitude
Valley
Tabulated below is an analysis of each retail precinct’s results.
Restaurant / Café / Bar
24.74%
46.09%
36.04%
21.74%
41.28%
68.13%
Health / Beauty / Leisure
21.65%
15.63%
21.24%
26.09%
24.77%
3.62%
Clothing / Footwear / Personal Accessories
14.43%
10.94%
8.85%
14.78%
11.01%
5.49%
Homewares / Household Goods
1.03%
0.78%
3.54%
3.48%
4.59%
2.20%
Property / Construction
1.03%
0.78%
5.31%
2.61%
2.75%
0.78%
29.90%
15.63%
14.16%
23.48%
8.26%
14.29%
Stationary / Business Supplies / Books
3.09%
2.34%
1.77%
1.73%
2.75%
0%
Vacant
4.13%
7.81%
9.09%
6.09%
4.59%
5.49%
Business Services
Source: LMW Research
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LMW Link ~ Inner Brisbane Strip Retail
Park Rd, Milton
“The Business Service Precinct”
Milton is an inner suburb of Brisbane located
approximately 2km from the central business
district (CBD). The suburb includes an eclectic
mix of office, industry, retail and residential
development. 2,597 businesses currently
operate in the suburbs of Paddington and Milton
with the majority related to either the
professional, scientific and technical services or
financial and insurance services sectors. Recently,
there has been an influx of new residential
apartments located near the Milton Railway
Station and Park Road precinct area. Conclusions from the survey suggest the following:
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At 4.13%, Milton had the lowest vacancy rate of all retail precincts surveyed.
The influx of new apartments recently completed (805 apartments recently completed, planned
and or under construction) in the area is stimulating demand for new retail tenancies to cater for
the mostly Generation X and Y population.LMW
Business services continue to play a major part in the tenancy mix in the precinct representing
29.90% of all tenancies. The future of this retail category along Park Road will be driven by the
sustainability of Milton as a popular location for businesses to operate.
Emergence of new retail tenancies to the precinct including Ribs and Rumps and the Scratch Bar.
New retail offerings located within such apartment complexes as “The Milton”, “Westmark” and
“Siena” residences has seen the traditional retail precinct of Park Road extend further along to
Railway Terrace, McDougall Street and Cribb Street.
Brunswick St, Fortitude Valley
“The Bar Precinct”
Brunswick Street, Fortitude Valley is located
adjacent to Brisbane’s CBD. Brunswick Street spills
from the alfresco Brunswick Street Mall, across
Ann Street and New Farm, into a burst of stores,
cafes, bars and clubs. It is home to a multicultural
assortment of dining options. The range of fashion
on offer includes local and national designer
boutiques, as well as art galleries and homewares
stores.
We see the below trends dictating the Brunswick
Street retail strip over the coming years.
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As at April 2016, the precinct had the second highest vacancy of all the precincts analysed at
7.81%.
There are currently 1,349 apartments under construction in Fortitude Valley. Many of these
complexes include a retail offering within the development. The emergence of these new
complexes could draw consumers away from the traditional strip retail offering located in the
Brunswick Street/China Town Mall.
Brunswick Street, Fortitude Valley had a strong representation (46.09%) of Restaurant/Café/Bar
tenancies recording the second highest rate of all the precincts surveyed.
The ever growing and competitive nature of the dining scene especially from other areas in
Fortitude Valley such as James Street could mean that the Brunswick St/China Town Mall
precinct will need to offer greater diversity requiring a shift beyond that of the traditional pub
dominance in order to remain a relevant force in the retail-dining scene.
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LMW Link ~ Inner Brisbane Strip Retail
Racecourse Rd, Ascot
“The Property Precinct”
Racecourse Road, Ascot is located 7km
from Brisbane’s CBD. The retail strip
offers diverse retail offerings such as
health and beauty, restaurants/cafes and
bars and boutique clothing. The area is
serviced by all forms of transport
including, bus, train and city cat ferry. An
analysis of the retail survey for
Racecourse Road, Ascot revealed the
following:
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The vacancy rate for Racecourse Road Ascot as at April 2016 was 9.09%, the highest of all
precincts. The majority of this vacancy was located in quasi commercial/retail complexes generally
located at the rear of the buildings.
Property / Construction tenancies had the highest representation of all the precincts surveyed at
5.31%.
The dominant industry category in the precinct was Restaurant/Café/Bar representing 36.04%.
Reflective of the above average personal median weekly income in the area, Health / Beauty /
Leisure tenancies were also prevalent at 21.24%.
New entrants to the precinct including 5 Boroughs, Eye Care Plus and Eataliano.
Racecourse Rd is facing new competition from other retail precincts areas such as the Gasworks
at Newstead and Portside Wharf at Hamilton.
The area is likely to benefit from the upcoming $950 million Mirvac Ascot Green development
which at present will see an additional 760 apartments added to the market.
Oxford St, Bulimba
“The Everything Precinct”
The suburb of Bulimba is located just 4km
from Brisbane’s CBD. Oxford Street,
Bulimba is an urban village that includes
award winning alfresco dine in and
takeaway dining options including
restaurants cafes and bars. Beauty health
and well-being outlets including hair
salons, day spas, pharmacies and medical
centres. Fashion, jewellery, homewares
and gifts are plentiful and property
services are vast. The area also includes a
boutique cinema and historic pub.
Analysis of the vacancy survey for the precinct revealed the following:
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A relatively tight vacancy rate as at April 2016 of 4.59%.
The mixed age profile of Bulimba may have contributed to the diverse retail categories represented
in the precinct.
Restaurant/Café/Bar tenancies were highly represented at 41.28%.
There are 211 apartments currently under construction and or in the marketing phase in the
Bulimba / Morningside region which should further aid the take up and or extension of retail space
in the precinct.
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LMW Link ~ Inner Brisbane Strip Retail
Caxton St/Given Terrace, Paddington
From a working class labour
stronghold and then neglected as an
inner city precinct in the 1960s and
70s, today Caxton Street is a
mainstream retail, entertainment and
recreation hub. Results from the
vacancy survey of the precinct
suggest the following:
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A vacancy rate of 6.09%.
Reflective of the above average
median income in the area
Health / Beauty / Leisure
tenancies were the highest of all precincts representing 26.09%.
At 23.48%, Business Services are also well represented in the precinct.
The recent edition of the Gambaro Hotel may have aided in the take up of retail space in the
precinct over the last 12 months.
Grey St, Little Stanley St, Southbank / South Brisbane
“The Restaurant / Cafe / Bar Precinct”
Brisbane’s Southbank is located on the southern
banks of the Brisbane River and includes 17
hectares of parklands. The area is a recreational,
education, arts, dining and shopping hub. Grey
and Little Stanley Streets adjoin Southbank.
These streets offer a diverse and eclectic retail
offering. Results from the vacancy survey of the
precinct reveal the following:
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A vacancy rate of 5.49%.
A low Australian dollar and increased
tourism numbers to Brisbane may have
contributed to a tighter vacancy rate over
the last 12 months.
Restaurant / Café / Bar tenancies were the dominant retail category representing 68.13%.
1,500 apartments in South Brisbane that are currently under construction should help aid in the
take up of retail space in the precinct and or see the precinct expand to adjoining streets.
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LMW Link ~ Inner Brisbane Strip Retail
For Further Information please contact the Brisbane office.
LMW
12/241 Adelaide Street
Brisbane CBD QLD 4000
T: (07) 3226 0040
E: [email protected]
No part of this research report or any reference to it may be included in any other document or reproduced or published in any
way without the written approval of the form and context in which it is to appear.
No liability is accepted for any loss or damage (including consequential or economic loss) suffered as a consequence of
fluctuations in the property market subsequent to the date of the report. The opinion herein is relevant as at the date of survey
only and no warranty can be given to the accuracy of the opinion at any point during the date of the report.
The research report is current as at the 15th of March 2016 only. The opinions herein may change significantly and
unexpectedly over a relatively short period including as a result of general market movements or factors specific to the survey
area and property classes, the opinions expressed in this research report are that of the researcher and is authorised by LMW.
Liability limited by a scheme approved under Professional Standards Legislation.
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