NEWS

Top 5 retail leasing trends for 2017

George Wragge, NSW Director of Retail Leasing at Colliers International.

With 2016 coming to a close, now is a good time to look into the crystal ball for what 2017 holds in the retail leasing space. Colliers International have had a great year adding on several more projects and working with an array of exciting developments from game-changing landlords. Our innovative approach to retail leasing has allowed new opportunities for exciting retail concepts such as white table cloth restaurant concepts opening up in Hospitals and unlocking retail in non-traditional assets such as universities.

So with that in mind, let’s explore what 2017 could mean for you…

1. Food and beverage operators will continue to drive growth in the sector

The increase in fast casual dining concepts this year has helped lead the food & beverage sector to quite an increase in growth and activity. Local food courts have been slowly evolving and in 2016 we saw some of the biggest changes in food court appearances and concepts, taking on a larger component of dining/seating area. This consumer demand for quality over quantity will pay dividends for retail landlords who seek to capture retailers who are showing innovative new store and food concepts. Retailers are looking to maximise spend per customer by accommodating them in store and up selling their dining experience. 

2. Under performing mixed-use developments will be in the spotlight

Poorly designed mixed use developments will provide the greatest proportion of opportunity as well as vacancy in Sydney. Developers will have to be more creative and receptive to alternative retail usages. Examples may include incorporating childcare or entertainment/play land style concepts. The most successful mixed use sites will be based on the station precincts of the north and south west Sydney growth corridors. Developers who change their philosophy of developing from the penthouse down, and spend a little more time maximising the retail outcome which will have the greatest success.

3. Fresh food demand will increase

The fresh food movement will strengthen even further as disposable incomes continue to grow and people become more aware of what they eat, the large supermarkets will have to place more emphasis on delivering a paddock to plate experience and operators like Harris Farm and About Life will increase their market share. The consumer perception of where their produce has been grown/raised will further penetrate the restaurant industry as consumers have a greater connection to what they put in their mouths. Eating “designer” fresh food products for the packing and associated ethics of how they were raised will be highly visible and in the consumers’ eye, fashionable fresh products are within the reach of a wide range of consumers unlike many luxury brands and labels – Vic’s meats are one of the first to emphasise the packaging and consumer experience related around purchasing their products. 

4. Food and beverage operators will move beyond the CBD

Quality food and beverage operators will recognise value outside of the CBD as rents and a competitive landscape pushes such operators into a once considered less appealing market. The continual supply of food and beverage concepts into the CBD will ultimately see saturation and the demise of many operators. Smart operators will see the value of an increasingly insular market where consumers want to live, eat and work in an area, with little need to explore suburbs outside of the one they habitat. Greater Sydney is progressively moving towards a city that will have three CBD’s including the Sydney CBD, the Parramatta CBD and the Liverpool CBD, and this will open opportunities for savvy retail operators who explore value outside of the traditional CBD.

5. Entertainment will become key to consumer engagement

Technology and entertainment both within shopping centres and individual retail outlets will drive the competitive advantage for retail landlords. Retail operators are increasingly seeing the value to lease within a shopping centre which in 2017 will become increasingly competitive as stock becomes more accessible. The inclusion of draw cards such as entertainment precincts that act as traffic drivers and the use of data and analytics means that landlords can provide a more effective trade prospect for retailers through centre intellectual property gathered on consumer spending habits that otherwise would be out of reach for many retailers. This is a great form of nurturing the viability of many small businesses and in turn providing less risk to the landlord and will possibly open the opportunity of centres taking on newer retail concepts knowing they can help them grow.



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