Small Investors Back On Main Street

Neighbourhood retail shopping strips have been severe pressure ever since the era of the big malls came in with Roselands in the 1960s, but the tide is showing some signs of turning.

Thanks to low interest rates, investors are snapping up sites in preference to investment apartments, which is leading to something of a revival along the strips.

And while the rents are not as high as in the heyday of the neighbourhood strips, they are not falling.

But where once the main street comprised a myriad of retailers from furniture stores to the family run mini-department stores, tenants are now service oriented, such as cafes, dry cleaners and beauty salons with a smattering of fashion, all of which suit a small local shopping strip.

It is these smaller sites that are finding favour with the ‘mum and dad’ investors who despite higher vacancies in some areas still see a better return from a shop than a flat.

One of the perpetual favourites for these investors has been former bank branches.

Research by CB Richard Ellis, from its recent sales indicates that 70 per cent of the 100 St George Bank branches sold by the firm over a four-year period were bought by small investors.

The average yield on these properties was 6.2 per cent, which compares to a return on a flat of 2 to 3 per cent.

Dustin Welch, CB Richard Ellis’s manager, metropolitan investment properties, said smaller investors were drawn to invest in this asset class for a multitude of reasons.

“Their preferences for purely passive investments has pushed demand for such properties to a new level, increasing prices and lowering yields within the sub-$5 million market,” Mr Welch said.

One are that was hit hard by the opening of the vast Westfield development at Bondi Junction was Double Bay but a few recent deals indicate the precinct is moving out of intensive care.

In fact, Double Bay’s first major commercial and retail redevelopment in the past eight years is about to hit the market in June, 2006.

Retail leasing agent Stephen Bowrey and Joshua Watts from Colliers International are handling negotiations for the mixed retail and commercial site, located on the corner of New South Head Road and Knox Street, owned by Fivex Commercial Property.

Mr Bowrey said that although the Woolworths/Solotel development had been shelved, the new boutique redevelopment was already generating high interest.

“Double Bay has had an enviable reputation as Sydney’s premium retail precinct, boosted by the high net worth of surrounding residents,” Mr Bowrey said.

“There has been significant inquiry off-market and we are already talking to a number of parties to lease the site, including prominent national and international brands for the retail space and a major international organization was seriously considering the upper two floors for a unique commercial business.

“Some very successful retail businesses, such as That’s Its fashion boutique, have opened recently in Double Bay and the area is going through a revitalisation period that has caused pain for some of the older style retailers but provided fantastic opportunities for new operators to gain a foothold in the lucrative Double Bay market.”

‘Sydney Morning Herald: 27 May, 2006’

Carolyn Cummins

Commerical Property Editor