George Street boulevard attracting world-class retailers
The short term pain of the George Street redevelopment has led to longer term gains with a plethora of new retailers opening flagship stores.
With the completion of the new George Street boulevard due late 2019, the once renowned grid-locked strip is fast becoming a retail powerhouse. There has also been a subsequent rise in rents of about 10 per cent.
It is expected that when the street is all completed up to Hunter Street, it will rival Pitt Street Mall for the premier strip in Sydney moniker.
Included in the new offerings are two new flagship stores of Vodafone and Optus, which sit next to the Apple store, further cementing the area between King and Market Streets as a technology hub. They join Telstra and Samsung in the same strip.
A new CBRE report says in the three years since plans were finalised to introduce light rail and transform George Street into a pedestrian-only thoroughfare, prime rents on the renowned strip have out performed other prime CBD locations by more than 10 per cent per annum.
CBRE research analyst Freddie Kareh said as George Street becomes more established as a retail destination, it would compete with Pitt Street Mall as the city’s major shopping hub.
“In the 10 years to 2027, prime rents on George Street will experience a net rental increase of 55 per cent in comparison to other prime locales in the CBD – equating to a 110 per cent total rental rise over this timeframe,'' Mr Kareh said.
“The uplift in rents and subsequent property values, in addition to the completion of light rail infrastructure and public domain upgrade, will attract more high-end retail tenants that will be able to meet these greater rent demands.”
Historically, George Street has not been considered an attractive central spine, with retailers over the past 10 years paying on average a 211 per cent premium to be located on Pitt Street over other prime locations on George Street.
By contrast, over the same period retailers in Melbourne have demonstrated a willingness to pay a rental premium of 109 per cent to be located on Bourke Street Mall as opposed to prime locations on the main pedestrian thoroughfare Swanston Street.
The report attributes the smaller rental gap between George Street and Swanston Street, and their respective prime locations, to the latter’s accessibility to pedestrians.
CBRE’s head of retail leasing Leif Olson said transforming George Street into a vehicle free zone would cement Sydney’s status as a world class retail destination.
“The positive impact of the light rail and pedestrianisation of George Street is already clearly evident, having achieved above market rental growth since the plans were announced - and attracting a new calibre of retail tenants moving from Pitt Street Mall to George Street,'' Mr Olson said.
“The George Street of tomorrow will be a premier pedestrian boulevard, lined with trees, street furniture and public art – a new public plaza where people meet to shop, socialise and dine.”
According to CBRE, while Pitt Street Mall will remain the premium retail destination, enhanced amenity and more competitive rents, along with a greater selection of shops along the new George Street Boulevard, will make it a more attractive proposition for retailers.
General Pants has already taken advantage of this, having recently moved from Pitt Street Mall to its new George Street store – reducing its rent by more than 60 per cent, while doubling its store size in the process.
Matt Hudson, national director, head of retail leasing at Cushman & Wakefield, says retailers are taking the opportunity to open marquee stores along George Street to take advantage of the pedestrian foot traffic.
''Once retailers were limited to Pitt Street Mall, but finding a site there is very difficult, so now they are shifting to George Street,'' Mr Hudson said.
''We have already seen Nike, General Pants, Optus and Vodafone open flagship sites and we expect more to follow.''
One of the biggest deals being worked on is the $2 billion redevelopment of Wynyard train station which will include a wide range of retailers.