International brands expand into Australian CBD retail strips

A positive outlook in the retail sector is driving international retailers to seek new markets for expansion, according to our latest Global Retail Highlights report. The report analyses 125 key shopping districts in 50 countries including Australia and offers insights into current performance and trends for the near future.

The “bulge effect” has occurred in Sydney, Melbourne and Brisbane CBD to accommodate international retailers who require larger spaces in core CBD retail precincts, according to Head of Retail at Colliers International, Michael Bate. 

“We’re seeing areas like Pitt Street Mall in Sydney, where international retailers like H&M and Uniqlo are coming in and demanding spaces of around 3,000sqm. This is pushing the local brands, who typically only require 200sqm, into surrounding streets,” Said Mr Bate.

“When you visit the core retail precincts of any city, be it London, New York, Tokyo or Paris, you’ll see the same brands along the main strip, and to find the local retailers you’ll need to step back a couple of blocks.”

Among the top 10 global retail rents for the year (per square foot in USD), New York’s Fifth Avenue is the pinnacle, with NYC’s Madison Avenue also on the list, while Hong Kong holds three spots. The list is rounded out by one spot each for (in alphabetical order, not by prominence) London, Milan, Moscow, Paris and Zurich. Sydney’s Pitt Street Mall has fallen out of the top 10 this year.

Key themes:

  • Luxury retailers are in the sweet spot. Luxury retailers are benefitting from income gains among the top earners and are thriving throughout many of the top global markets, including Paris, London, New York and prime cities in Asia. 
  • New supply is robust in developing markets. The global expansion of the workforce and the middle class is spurring a need for new supply, which is concentrated in developing countries in Europe, the Middle East and Asia that have economic growth, political stability, a growing middle class and business-friendly regulatory environments. 
  • Optimism is tempered by threats to global economic growth and the spectre of e-commerce. E-commerce is affecting both traditional and luxury retailers across the globe, exerting pressure on merchants to become more creative with concepts regarding their use of space. One popular strategy is to transform stores into product showrooms in an attempt to entice greater foot traffic and additional online sales. 
  • Strong performance of high street markets and growing development in emerging markets. The generally positive outlook is underpinned by the economic recovery in the U.S. and strong job growth in many parts of the globe.
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