CBD RETAIL CURBED BY LOWER MIGRATION
Written on the 1 April 2011
THREATS and opportunities facing the local retail property market were outlined by property economist Ian Shimmin at a breakfast with some of Brisbane’s leading retailers this morning.
Shimmin discussed retail growth over the next three years and the impact of slower population growth as a consequence of lower immigration intake.
“In the case of Queensland, we have the dilemma that interstate migration is quite a lot less than it has been in the past and population growth in Queensland is probably going to take a long time,” says Shimmin.
The comments are in contrast to a SEQ Retail Market View report, compiled by CBRE, which indicated population growth in the inner city and a jump in CBD workers underpinning the Brisbane CBD’s emergence as one of the strongest performing retail property sectors in South East Queensland.
The report showed the CBD specialty store vacancy rates fell to 4.5 per cent as at the end of 2010, with prime locations in demand from local, national and international retailers.
Shimmin noted that discretionary spending is soft and of course, coupled with inflation, is another troubling aspect, but says the strong Australian dollar is something to look forward to in that it should help retailers feel more confident in terms of rental stability going forward.
“The good news for landlords though, is that we’re living in a far more competitive environment with supermarkets, so for the consumer, there’s a price war on as well and that’s going to have an impact on price point. There will be an impact on the independent supermarkets,” he says.
“Online shopping as most people will have been reading about has become main stream - consumers have now accepted that online shopping is secure, that there are price advantages, the quality is there and the access is there.”
Shimmin believes there will be some interesting aspects that come out of online shopping when it goes mainstream.
“My guess is that we’ll be hearing a lot about online shopping in future and the other interesting thing we’re going to see in Australia is international interest, which will of course mean that local retailers will have to lift their game,” he says.
The Australian Retailers Association (ARA) this week stated that Australian retailers are operating in the slowest gear of a two speed economy.
Retail trade figures released today by the ABS show that Australian retail turnover rose 0.5% in February 2011, seasonally adjusted, following a rise of 0.4% the previous month.
The ARA says the 0.5 per cent growth i would have been far worse without many households replacing damaged goods and supplies after the floods in January.
ARA executive director Russell Zimmerman says February was traditionally the toughest month for retailers but this year consumers were restocking in February after the spate of floods, cyclones and other natural disasters that swept across most of the nation in January and early February.
“Usually February isn’t a great month for retailers as credit card bills from Christmas and back to school costs tighten many family budgets. While 2011 February trade followed an 18 month trend of sluggish sales, the result has actually been boosted by consumers replacing damaged goods including furniture, white goods and clothing,” he says.
“Some retail categories that in previous months have been posting sales decline when compared to the same time in 2010 (including household goods, clothing and footwear, and department stores) did post some growth year-on-year in February 2011.
“Queensland - the state hardest hit by floods and cyclones – posted significant retail sales growth in February with 2.3 percent growth month-on-month and 4.8 percent growth year-on-year.
“While retailers are really struggling and as consumer cost of living rises and household savings hit the highest level in over 20 years*, the ARA is calling on the Reserve Bank to continue its steady hand on interest rates next Tuesday.”
Household goods retailing (2.0%), Other retailing (0.7%), Clothing, footwear and personal accessory retailing (0.9%) and Cafes, restaurants and takeaway food services (0.3%) recorded rises in February 2011. Turnover was relatively unchanged in Food retailing (0.0%) and fell in Department stores (-0.4%).
Turnover rose in Queensland (2.3%), Western Australia (1.6%), Tasmania (1.3%) and the Northern Territory (1.7%). Turnover fell in Victoria (-0.3%), South Australia (-0.5%), the Australian Capital Territory (-1.5%) and New South Wales (-0.1%).
Trend turnover rose 0.2% in February 2011. This follows rises in January 2011 (0.1%) and December 2010 (0.1%). Trend turnover rose 2.3% in February 2011 compared with February 2010.