Non-food retailers in mature markets with growth in their sights have recently pinned their hopes on three key elements; factory outlet locations, e-commerce and expansion into emerging markets, with many press reports of high profile retailers expanding abroad.

A key trend in the retail market looks in fact to be the reverse – many Asian retailers are looking to establish themselves into Western markets. Watch for a steady stream of fashion, health and beauty brands to come knocking on the door in mature markets such as Australia in the years to come.

Are there positive implications for shopping centres and other retail distribution channels in Australia? The answer is a qualified “yes.” With regards to the benefits to shopping centres, much depends on whether incoming brands take the flagship plus e-commerce road, or decide to establish full blown store networks.

Drawn from “Asian retailers see Western goldmine” by Michael Baker. Full article at Michael’s excellent blog here.

When it comes to investing in commercial real estate and most particularly shopping centres, the tenancy mix for the property is the key to a good return. A great property manager can add value to the property for the landlord through good lease and tenancy mix management.

The tenancy mix for a retail shopping centre takes into account a number of key factors such as:

• The expiry profile for each and every lease
• The options strategy relating to extra lease terms
• The rent review profiles and timing
• Existing or soon to be vacant tenancies
• The existing customer profile for the property
• The clustering factors applying to other tenancies nearby
• The existing levels of sales within the property and with each tenancy
• The anchor tenant lease and location to support other tenants

Given these complex facts, it is easy to see why the landlord should select a good retail property manager. The choice of manager should be based on their skills, rather than the cheapest fees, as sometimes is the case. When it comes to investment property performance, cheap does not always produce the best financial performance for the property. We advise you to consult with the agency with the most effective property management systems before you make your final choice.

Article courtesy of John Highman – Specialist Writer & Trainer, Commercial and Retail Real Estate

Northbridge is a proven shopping destination with Northbridge Plaza the number one Centre in its class at $16,720/sqm turnover, beating even the Queen Victoria Building, Sydney (source SCN 2010).

Clearpoint now have a selection of retail shops for rent close to Northbridge Plaza with wide glass frontages ranging from 132.4sqm to 294.4sqm plus plenty of parking.

Click here for details if you are looking for room to grow or an affordable alternative to shopping centre rents in Northbridge.

Retail shops for lease near Central Railway

Limited selection of shops from 21.5 sqm to 91.5 sqm now available.

Some suitable for food use. All with minimum 5 metre glass frontages.

Clearpoint is pleased to offer for lease a limited selection of new retail shops at 827-839 George Street, Sydney.

This new development is the undertaking of TAFE NSW Sydney Institute and will offer a good retail tenancy mix of food use and retail spaces, in the company of pre-commitments from a large gallery café plus a beauty salon. The property has five remaining retail shops for lease ranging from 21.5 sqm to 74.5 sqm.

The site is centrally located below TAFE NSW Sydney Institute on George Street, in one of Sydney’s busiest pedestrian hubs and moments from Central Railway and bus interchange. This new retail hub offers a range of opportunities to retailers drawing on a captive audience of students, commercial offices and a dense surrounding residential population.

For details on remaining opportunities or to arrange a viewing please call Clearpoint on 1300 325 327 or click here for property details.

realestateVIEW.com.au recently conducted research into mobile usage for property searches.
More than 2000 people participated. The research showed 40 per cent of people used their mobile as a primary or secondary device to search for property.
The most important thing consumers wanted was easy access to an agent’s contact details.

Time to re-think the retail mould?

Flexibility in retail layouts is the key to a successful retailer growth strategy, especially in a mature market like Australia.

Where growth is no longer driven by rapid development of new shopping centres, growth may only be possible by breaking the mould and looking at previously ignored real estate opportunities like factory outlet centres, mixed use developments, university campuses, and urban in-fills.

There are many examples of retailers that have become good at adopting flexible formats to suit local sites and conditions, such as US department stores Bloomingdale’s and Walmart.

Walmart has developed a slew of customised formats for every occasion, from 18,000 sqm freestanding supercentres at one end to 1,000 sqm edited food stores at the other. This year it also came up with a 325 sqm concept for university campuses which includes a pharmacy and licensed apparel.

For small retailers in Australia who are frozen out of shopping centres, opportunities exist for expansion both at home and overseas.

Food for thought when seeking your next investment opportunity or setting up a new retail outlet.

Drawn from “Formats Outside the Comfort Zone” by Michael Baker. Full article at Michael’s excellent blog HERE.

Article by Anthony Whealy and Isabella Ferguson, Gadens Lawyers

The Affordable Rental Housing SEPP was introduced in July 2009 to facilitate new affordable rental housing by providing a range of incentives to encourage developers to build new developments, of which at least 20% of units would be affordable rental housing, managed by not-for-profit community housing providers for a period of time (10 years).The general incentive provided was increased density/floor space being allowed.

The SEPP has been reviewed over a number of recent months, culminating in it being battered and bruised by significant amendments announced on 20 May 2011. In public announcements made that day, Planning Minister Brad Hazzard took aim at the SEPP and did not miss, labelling the SEPP as a ‘a cash cow’ allowing ‘small time developers to rip into local communities and change their entire face’, and referred to ‘the butchery committed on communities’ by the SEPP.

Although Mr Hazzard’s statement says that the State Government has ‘stopped all new private development applications’ under the SEPP (a claim also incorrectly reported by all major newspapers), the SEPP has not in fact been stopped. Rather, it has been amended, and now continues to operate, but in its amended form.

The key changes to the SEPP are:

• For dual occupancies, multi dwelling housing, or residential flat buildings, the SEPP is now only available if the particular development is already permissible on the land (under another LEP or SEPP). Previously the SEPP allowed these developments in all residential zones, but 20% of the dwellings had to be used for affordable housing in zones where the DA was already permissible, and 50% of the dwellings /units had to be used for affordable housing in zones where the DA would otherwise have been prohibited. As the latter category is no longer available, only the 20% minimum requirement remains.
• The requirement that 20% of the number of dwellings be provided as affordable housing allowed developers to build for example 20% of units as small as 1 bedders to satisfy the affordable housing component, and build the other 80% as much larger 2 bedders or 3 bedders which would not be provided as affordable housing. This loophole is fixed by requiring 20% of the total gross floor area to now be provided as affordable housing
• Where such DAs are permissible, the amended SEPP does still provide floor space ratio (FSR) bonuses (otherwise why use the SEPP at all?). These bonuses remain unchanged from the unamended SEPP. The extent of the bonus floor space depends on the amount/component of affordable housing provided, but generally the FSR bonus will be between 0.2:1 and 0.5:1.
• Where such DAs are lodged, seeking to achieve additional FSR as contemplated by the SEPP, a new ‘character’ test applies, whereby the consent authority must consider ‘whether the design of the development is compatible with the character of the local area’. Much information released by the Department misstates this requirement as one whereby the development must actually be compatible. However, the true position is that this is only one matter that must be considered and weighed up as against all other relevant matters for consideration. A development might not be compatible with the character of a local area, but might nevertheless warrant approval for other reasons.
• More problematic though is interpreting what is meant by ‘the local area’ – where does it start and where does it finish? Media releases, fact sheets, circulars, and website statements released by the Department on 20 May all either use different terminology altogether (such as ‘the surroundings’ ‘the neighbourhood’ ‘the locality’ or ‘the area’) or are silent on what the concept of ‘the local area’ captures. It seems to us that as a matter of legal interpretation, the term has to be construed broadly to give effect to the aims and objectives of the SEPP, which are to facilitate, rather than to restrict, affordable housing. As such, the ‘local area’ would be a large area comprising at least a number of blocks, rather than looking at a development by reference to the buildings immediately adjacent to it or only within the same streetscape. If there are other large buildings within the broader ‘local area’, then the proposal may well be compatible with the character of that local area. This view would be supported by the Department’s December 2010 Discussion Paper, which suggests an analysis of ‘streets and blocks’ should be required.
• Tougher parking requirements now apply. Previously the requirement was 0.5 spaces per dwelling. Now the SEPP requirements are dependant on room numbers per dwelling. The 0.5 spaces continues to apply to 1 bedroom dwellings, but this doubles for 2 bedders and triples for 3 bedders.
• The requirement that DAs relying on the SEPP (to obtain bonus FSR) be located within certain distances from accessible public transport facilities – for example 400m from a regular bus stop, or 800m to a railway station or wharf, are largely retained in identical form. The difference here is that the bus stops must also be ones that are used until later at night (9pm weekdays rather than 6pm) and now also on weekends.
• No changes were made to the SEPP in relation to granny flats (secondary dwellings);
• In relation to boarding houses, these are permissible in many zones but within low density zones, they are permissible only when they are within specified distances from regular public transport facilities. Parking requirements also effectively double in low density zones, but are still reasonably low, for example 2 spaces are required for a 10 room boarding house. In other areas, away from accessible public transport facilities, a 10 room boarding house would require 4 spaces. The new “character” test described above also applies to boarding hose DAs.
• Savings provisions are provided for pending DAs that have already been lodged. However the savings provisions are somewhat harsh in that those applications, which have already been designed and may be well into their DA assessment, will now be subject to the consideration of whether their design is compatible with the character of the local area. In addition, the requirement that they provide at least 20% of total “gross floor area” (rather than the old requirement for 20% of total dwellings), will apply to those pending applications.
• The Government has also announced that it now intends to review the SEPP entirely with a view to producing a new affordable housing SEPP. Surprisingly though, the Department will be working with councils to develop their own affordable housing strategies which, if satisfactory, will enable those councils to be exempted from the new SEPP altogether. This could see a return to a piecemeal, council by council approach to the State’s affordable housing crisis. Or, more likely, a process of forcing all developers to pay for new affordable housing by way of mandatory levies whenever they carry out any new development of any kind.

Conclusion

There can be little doubt that NSW is experiencing a genuine rental crisis. Market forces of supply and demand almost certainly guarantee that with less rentals available, rental prices will continue to increase, intensifying the shortfall in ‘affordable’ rental housing. The demand for rental housing in NSW is predicted to increase by 80% by 2045. There can be no doubt that NSW faces a genuine housing affordability crisis.

Previously the AH SEPP had the potential to go some way to increasing the stock of affordable rental housing in NSW. Whether it went far enough was highly doubtful. The amendments to the AH SEPP, announced on 20 May 2011, while certainly a win for local councils and local communities, will make it less likely that the private sector will choose to contribute towards the construction of new affordable housing stock in NSW, other than perhaps on a very small scale by way of the retained ‘granny flat’ provisions of the AH SEPP.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Article by Mary Digiglio, Swaab Attorneys

Retail landlords now have new disclosure obligations and also need to be aware of proposed changes under the Retail Leases Amendment Bill (2011).

New disclosure obligations for retail landlords

As from 1 January 2011, a new form of landlord disclosure statement was introduced across the eastern seaboard states. This new form of disclosure statement must now be provided for all retail leases entered into on or after 1 January 2011. It requires landlords to include more detailed information not previously required. A template of the new form of landlord disclosure statement can be downloaded from the website of NSW Fair Trading.

Retail Leases Amendment Bill 2011

On 10 January 2011, the NSW Government released an exposure draft of the Retail Leases Amendment Bill 2011. If enacted in its current form, it would result in a number of significant changes to landlords’ responsibilities in retail lease matters. The Bill is intended to address a number of criticisms of the Retail Leases Act 1994 (NSW) and correct what is perceived as a power imbalance between larger landlords and small retail tenants.

A summary of the key proposed changes is set out below.

Further disclosure requirements for the landlord (s11)

The tenant may require the landlord to provide an updated disclosure statement before the tenant exercises an option for a further term.

Undisclosed outgoings (s12)

The tenant will not be required to contribute to outgoings that are not disclosed in the disclosure statement. This poses a challenge for landlords of new shopping centres, who may not be aware of all of the outgoings likely to be incurred over the life of the lease at the time of issuing the disclosure statement.

Mandatory registration of retail shop lease (s15)

Retail leases of three years or more will be required to be registered on the title of the premises or building in which the premises are located. A summary statement will need to be prepared and included. This is intended to make comparable lease information publicly available to tenants, who will then be able to obtain details of other registered leases.

Claiming on bank guarantees (s16)

The Director General will be entitled to publish guidelines in relation to the claiming on bank guarantees held by the landlord as security for the tenant complying with its obligations under the lease.

Prohibition of passing land tax on to tenants (s26)

To bring NSW in line with the retail provisions in relation to land tax in Victoria and Queensland, the landlord will be prohibited from passing on land tax to the tenant as a recoverable outgoing.

Increased notice period (s33)

The current requirement for the landlord to give the tenant two months’ notice of any alteration or refurbishment that may adversely affect the tenant’s business will be increased to six months.

Relocation of the tenant (s34A)

In the event that the landlord invokes the relocation clause, alternative premises which are offered to the tenant must be of reasonable comparable commercial value to the existing premises leased by the tenant. If the landlord does not offer appropriate premises and the tenant terminates the lease, the tenant is entitled to claim depreciated fit out costs from the landlord as compensation.

Demolition (s35)

The landlord cannot require a tenant to make any repairs or improvements after the landlord has given the tenant a notice of termination on grounds of demolition.

Promotion levy (s56)

The tenant is entitled to a refund of contributions towards shopping centre advertising and promotion that remains unspent at the end of the lease.

Administrative Decisions Tribunal (ADT, s73)

The monetary limit of the ADT will increase to $750,000 (from $400,000).

Summary – Future of the Retail Leases Amendment Bill is currently unclear

The Bill is only in draft form and significant amendments could be made to it before it is enacted. It is also possible that opposition to the Bill will prevent it from being enacted altogether.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Growing interest in the Lane Cove area has been highlighted by the entry of two National retailers to the Lane Cove shopping mix.

Shoe Superstore and Chemist Warehouse have both take up space on Longueville Road, with stores opening this week.

Rhys Donnellan of Clearpoint negotiated both leases.

“Chemist Warehouse with 389sqm at 73 Longueville represents one of the five major retail tenants in Lane Cove, and Shoe Superstore in 221sqm at 118 Longueville is also a significant uptake of space. The commitment to these locations by National retailers is sign of a return to confidence in the retail market as a whole.”

“The recent high density rezoning in the Lane Cove LGA is also likely to influence further investment in Lane Cove by retailers and developers, with a flow on to Lane Cove property values”.

The somewhat controversial rezoning under the NSW Government Metropolitan Strategy allows for an increase of 3,900 new dwellings in the Lane Cove LGA, and 30,000 new dwellings across the Lane Cove, Hunters Hill, Mosman, North Sydney, Ryde and Willoughby Council areas.