Geelong CBD Retail Study April 2011Economic ConditionsOn a national level, retail turnover has grown modestly over the Victoria’s economic growth is forecast to continue to outstrippast 12 months as higher interest rates, petrol and food prices Australian gains in the short term with real gross state producthave lead to consumers curbing their spending patterns. While growth (GSP) forecast to rise to 2.8% in 2011.the Australian economy continues to recover, consumers remaincautious despite solid wage growth and a tight labour market. Tenancy MixRetail sales data for February show that while Australian retail The Geelong CBD Core comprises 791 shops and totalssales increased by 0.5%, surprisingly most of the increase 172,587m2 of retail floor space of which 41% resides in thespending resulted from a rise in household good sales. Although shopping centres of Market Square and Westfield Geelong; withnon-food retailing rose by 0.9%, this increase failed to street frontage retail space accounting for 58% and arcadecompensate for January’s 1.1% contraction. Most retail sales retailing accounting for the remaining 1%.categories recorded modest growth with only department storesdeclining marginally over the month. Over the past 12 months, Overall, department store retail space totals more thanfood retail sales increased by 5.8% compared with non-food 34,700m2 and accounts for approximately 20% of Geelong’s CBDretail sales which increased by only 2.1%. retail market. In comparison to the Melbourne CBD, the Geelong CBD has a higher exposure to department stores which is likelyVictoria remains one of Australia’s best performing states in due to a lack of Sub-Regional shopping centres in the Geelongregards to retail turnover buoyed by solid population growth region providing this offering. Clothing, food retailing, footwearwhich has led to significant housing construction. Over the year & soft goods exceed all other retail categories and accounts for ato February 2011, total Victorian retail turnover grew by 2.8% further 26% of retail space in the CBD.but like other parts of the country consumers decreased theirdiscretionary spending. Spending on electrical goods and Unsurprisingly, within the shopping centres of the CBD,takeaway food contracted and other discretionary retailing department stores and clothing tenants dominate the tenantcategories such as clothing and department store spending mix accounting for more than 66% by GLAR (gross lettable areawitnessed only modest growth over the year. In contrast retail).consumers sought “cheap” luxury goods with increased turnoverrecorded in cosmetics and book sales. Geelong CBD Retail Tenancy Mix Feburary 2011 Food Retailing Dept. Stores Retail Turnover by Industry Performance 8% 5% 4% 14% Clothing & Footwear Index 2004-2011 Household Goods 8% 180 23% Recreational Goods Food Clothing & Footwear 8% Dept. Stores Cafes & Restaurants Personal Retailing 160 8% Hospitality 5% 17% Services 140 Entertainment Other 120 Source: Opteon Victoria 100 80 In contrast, food and hospitality (hotels and bars) account for Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 around 23% of all street frontage retail space in the Geelong Source: Australian Bureau of Statistics and Opteon Victoria CBD.Consumer confidence remains optimistic, rising 1.2% up to Within the CBD several precincts have evolved over time with105.3% in April. Although consumer confidence continued its food retailers making up 18% of all Ryrie Street tenancies,rise in April, the index still remains below its rate in December particularly around Yarra Street and the cinema area. Whereas2010 having fallen earlier this year as a consequence of a string around the western end of Ryrie Street, an agglomeration ofof natural disasters. Consumers continue to show restraint with serviced based occupants (such as real estate agencies) isthe majority more focused on savings with spending levels beginning to emerge, particularly around the intersection ofmodest. Gheringhap Street.
VacancyTotal vacancy (by gross lettable area) for the CBD Core as at Australia, Geelong’s retail strip retail levels are considered veryFebruary 2011 is 8.3% which has decreased from its peak of affordable, if not low.11.7% in June 2009. This is despite the expansion of WestfieldGeelong, completed in April 2008 which added approximately The Geelong CBD market has very limited exposure to17,000 sq m or about 90 shops. institutional ownership and as such it was somewhat insulated from the significant swings in value during and post the GFCA number of streets in the CBD recorded a 0% vacancy rate which occurred in metropolitan markets. Average market yieldsincluding: James Street and McLarty Place within the café and have remained relatively steady over the past 12 months rangingarts precinct, whilst the new retailing/restaurant precinct along between 5-6.5% with private investors still dominatingEastern Beach Road is fully occupied, interestingly at much purchases.higher rents than achieved in the traditional CBD area. Outlook Geelong CBD Vacancy Rate Vacant Shops (GLAR) Feburary 2011 Fundamentals supporting retail spending still exist. Real gross 20.0% Total Vacancy - 8.3% 16.4% state product (GSP) is forecast to rise by 2.8% in 2011, above the 16.0% 13.0% 2.7% growth achieved in the 2010 calendar year . 12.0% 8.0% Furthermore, retail turnover for Victoria is expected to increase 4.0% 1.8% by 4.2% in 2011, just above the 4.0% growth recorded in 2010. 0.0% Shopping Centres Street Frontage Arcades In the short term, the vacancy rate for the Geelong CBD retail Source: Opteon Victoria market is expected to fall as more national tenants are likely to be attracted to the Geelong market due to it’s “affordability”.Within the CBD Core, vacancies with street frontage stood at The recent opening of MacPac and Witchery in the CBD are13.3%, while vacancy within Geelong’s CBD shopping centres positive signs.was a very modest 1.8%. Vacancy within Geelong’s arcadestotalled 16.4%, but this statistic is susceptible to volatility given The recent chorus of debate regarding the apparent demise ofthe small amount of retail space within this category. the CBD has demonstrated one thing - the people of Geelong areIn terms of quality grades, more than 100,000m² of retail space passionate about their CBD. In the longer term, the futurewithin the Geelong CBD Core is classed as prime with its vacancy direction of the Geelong CBD will to some extent be determinedstanding at 5.1%. In contrast, approximately 71,000m² of retail through the preparation of “Vision II” .space in the Geelong CBD is classed as secondary with itsvacancy totalling 13.0%. Deakin University have made it public knowledge that they would like to increase their student numbers in the city toRents & Yields 10,000 students and this would create a true “Univer-city” which could be the impetus required to regenerate the city centre.Despite the credit crisis of 2008 and an increase in the floorspaceof 10% to the Geelong CBD Core, surprisingly statistical dataindicates that CBD retail rents have steadily increased since2005.In fact, Geelong CBD street frontage rents have increased by anaverage 10% during 2010. As at April 2011, CBD street frontagespeciality shop rents range between $200/m2 and $300/m2. Bycomparison to other regional centres across Victoria andContact us for further information or to obtain the full report- Richard Jenkins– Research Manager firstname.lastname@example.orgMain Contacts Todd Devine– Director Commercial Services email@example.com Level 1, 68-70 Gheringhap St, Geelong , VIC 3220Office Address Ph: 1300 786 022Website www.opteonvictoria.com.auEmail firstname.lastname@example.orgDISCLAIMER- This report is published for general information only. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no legalresponsibility can be accepted by Opteon Victoria for any loss or damage resultant from the contents of this document. As a general report, this material does not necessarily represent the view of Opteon Victoriain relation to particular properties or projects. Reproduction of this report in whole or in part is not permitted without prior consent of, and proper reference to Opteon Victoria.