- Buyer demand has recovered in the last 12 months and sales have returned to their highest levels since 2015.
- The recovery in rental demand is not very rapid as retailers face the ongoing challenges and uncertainties of a pandemic.
- Private investors are increasingly looking for assets tenanted by “pandemic proof” businesses with low risk of vacancies.
- The proportion of companies trying to occupy space in Australia’s CBD is declining, highlighting the ongoing challenges faced by retailers in these markets.
How is the search volume tracked?
Searches for buying personal wealth were strengthened in 2021 and peaked in October and then declined in line with the seasonal effects normally seen towards the end of the year.
In contrast, after peaking in March, the number of searches for renting commercial facilities has been declining throughout the year, below 2020 levels.
The expansion of the spread between buy and lease searches is not surprising. In contrast to investors who tend to take a long-term view when buying assets, tenants focus on short-term ones that show significant uncertainty in the presence of COVID-19. I am.
The combination of factors such as blockages, social distance requirements, and remote work creates difficult situations for many retailers. Many retailers may continue to postpone leasing decisions until greater certainty.
Sales have recovered
After the pandemic in 2020, retail sales fell to the lowest levels seen in more than a decade. However, significant recovery has been seen in the last 12 months and volume has recovered to its highest level since 2015.
Contribution to this result was Australia’s largest direct retail transaction ever recorded. We have acquired a 25% stake in Sydney’s Macquarie Center and a 20% stake in the Gold Coast Pacific Fair by AMP for a total of $ 758.9 million.
Where are investors trying to buy?
Sydney is the most popular destination among those looking to buy commercial facilities in New South Wales, accounting for 3.3% of all searches in 2020 to 4.7% of all searches in 2021.
Given the challenges facing CBD with COVID-19, this increase in demand is surprising, but some investors may see opportunities with weaker pricing conditions.
In contrast, Melbourne is becoming more alert to investors. While continuing to be the most searched Victorian location among those considering renting retail stores, Melbourne’s search share has fallen from 4.8% to 3.4% in the last 12 months. increase.
Similar declines have been seen in other capitals over the past 12 months, including Adelaide (18.8% to 17.8%), Perth (6.6% to 3.8%) and Hobart (8.2% to 5.1%).
Where are companies considering leasing?
Retailers in CBD, Australia have been hit hardest by the pandemic. Decreased office occupancy and fewer residents have significantly reduced walking traffic in the city.
This has reduced the demand for CBD retail space among those considering renting.
In 2020, Sydney CBD was the most searched location in New South Wales among those considering renting retail space, accounting for 3.7% of all searches. Since then, it has fallen to third place after Surry Hills and Alexandria, accounting for only 3% of searches.
A similar trend has been observed in Victoria, where the percentage of retail rental searches in Melbourne CBD dropped from 5.7% in 2020 to 5% in 2021. Richmond is currently the most searched suburb of those looking for retail, rising from 3.7. From the percentage of searches in 2020 to 5.2% in 2021.
In Queensland, Fortitude Valley is the most sought after suburb by retail tenants, accounting for 6% of all searches (up from 4.6% 12 months ago). The city of Brisbane followed, but its share fell from 3.1% in 2020 to 2.7% in 2021.
Floor area requirements
Of both investors and tenants, commercial facilities ranging from 200 to 500 square meters are the most in demand, accounting for 37.9% of purchase searches and 43.5% of lease searches, respectively.
In general, people looking to buy a commercial facility are looking for more space than people trying to rent it. 26.2% of searches to buy retail stores were for properties with at least 500 square meters of space, compared to 19.6% of rental searches.
What are investors looking for on a retail site to buy?
As a sign that private investors are becoming more cautious throughout the pandemic, they are increasingly buying assets with tenants. As a result, the number of searches for “tenant investment” has increased by 98% in the last 12 months, making it the most searched key phrase. In addition, the search for “high yield” surged by a staggering 1,010% at the same time.
Demand for assets with pandemic and recession-resistant tenants is increasing, with “medical” searches increasing by 548%, “service station” searches increasing by 421%, and “storage” searches. The number of searches has increased by 168%.
What are companies looking for on leasing retail sites?
Among those considering renting commercial facilities, “kitchen” was the most searched keyword, followed by “restaurant / food”.
Keywords that have recorded significant increases over the last 12 months are “bar / alcohol” (up 93%), “beauty salon” (up 101%), and “childcare” (up 101%).
In contrast, there was a significant decrease in “grease traps” (down 60%) and “over-the-counter” (down 28%).