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July 9th, 2004, 05:27 PM
What's in store for booming CBD
By Royce Millar, Rachel Wells
July 10, 2004
Premier Steve Bracks yesterday helped announce that a string of new retail businesses had signed at the fledgling Victoria Harbour precinct at the Docklands.
Just two years into the 20- year project, developer Lend Lease had found tenants for a third of the available retail space in the heart of the Docklands.
The announcement is the latest contribution to a whirlwind of retail activity in the city and surrounds.
Yet just a decade ago the CBD was little more than a place the office workforce couldn't desert quickly enough at the end of the working day.
It seems the city's demise was its making. Cheap rent and vacant warehouses and offices lured artisans, artists and urban adventurers back to the centre.
Low costs and relaxed drinking laws allowed boutiques, bars and cafes to flourish in the CBD. The city became cool. Now it's hot. But is the retail boom in fact a bubble?
After decades of decline, retail floor space is expanding quickly and will grow by more than 200,000 square metres or 20 per cent by 2006. New shopping precincts are opening at the Queen Victoria Village, the GPO, Spencer Street Station, Melbourne Central, the Docklands and Southbank.
Quarterly figures compiled by city estate agent CB Richard Ellis reveal a core retail vacancy rate of 1.25 per cent. Just a few years ago it was more than 10 per cent.
Lloyd Parker, the head of retail for agent Colliers Melbourne CBD, says agents cannot find enough retail space to accommodate businesses wanting a piece of the action. "We're getting calls left, right and centre from people wanting to be in the CBD. I don't know where it's all coming from," he says.
Some of it, in fact, is coming from Chapel and Brunswick streets. Bianca Wiegard, the co-founder of the Fat fashion stores in Prahran and Fitzroy, is opening a new store at the GPO next month.
While she says the time is right to move into the busy CBD, she admits to some nerves.
"But then again I was nervous about moving to Chapel Street too because people kept telling us there was too much competition."
Retail economist Julian Ganly does not expect a bust to follow the boom. He says the city's burgeoning worker and resident populations and its growing status as a shopping mecca will continue to drive strong demand.
"Inevitably there will be some failures. The big question is the volume of failures. Is it going to be higher than the normal percentage?"
Lloyd Parker of agent Colliers is in no doubt that the retail growth is sustainable. He says the sector was stagnant for years but is now catching up to demographic trends.
Can the small businesses that sparked the retail renaissance survive the rush that followed them?
Joshua Loudoun, the director of retail services at CB Richard Ellis, says some smaller, independent retailers might struggle in a booming city market.
Rents, in particular, will become problematic for some businesses.
He says average retail rents have grown 6 per cent in the 12 months to June 30. In some areas, notably around the fashionable Little Collins Street, the increases were much greater.
Still, Bianca Wiegard is slightly nervous. "There's been a bit of an explosion in the city and it is a bit overwhelming," she says.
"Sometimes I look around and think 'God, surely we don't need any more shops.' "
July 9th, 2004, 06:32 PM
I wonder if the extra retail space in cental Melbroune will bring more people into the CBD or just spread the spending around
July 9th, 2004, 10:35 PM
I think it is a very positive sign and will help to continue the trend of people shifting to apartments in the CBD.The shift in home qwnership rates in the futrre will also help to fuel this trend of renters living in the inner city.
Property boom splits nation
By James Button, Andrew Stevenson
July 10, 2004
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Australia's six-year property boom has opened a huge financial gap between the richest and poorest Australians, and a seemingly permanent divide between home owners and renters.
A study by Canberra University's National Centre for Social and Economic Modelling has found that Sydney has become Australia's wealthiest but most unequal city, while Melbourne has greater home ownership and a more even wealth spread than the national average.
Dramatic growth in the value of homes has driven the wealth increases over the past 10 years, according to the study by Dr Simon Kelly of NATSEM.
The research, which used Australian Bureau of Statistics data to assess how the property boom has affected individual wealth in the past 10 years, showed that nearly all Australians who owned homes benefited from the boom.
People in the top fifth in financial terms made $250,000 in the past 10 years, two-thirds of which was in home equity.
By contrast, people in the bottom fifth made just $3000, half of which was in superannuation. Since more than 90 per cent of this group rent their homes, they made nothing from the boom.
The study shows that an Australian in the top fifth of the wealth table is worth nearly $650,000 - more than 100 times a person in the bottom fifth.
Professor Judy Yates, associate professor of economics at Sydney University, said she suspected it was the first time such a huge wealth redistribution had been driven by soaring house prices.
She suggested the changes would create a divide between owners and renters that could last for generations.
"Children of current home owners will be protected in part from the increase in house prices through inheritance (or through being helped into home ownership by parents)."
The data also shows a growing divide between young and old.
People over 65 increased their home equity by an average of $80,000 in the 10-year period - four times as much as for people aged 15 to 34.
Sydney, where the richest people live but where a third of people rent their homes, is now the centre of income inequality in Australia, according to Monash University demographer Dr Bob Birrell, who has studied the NATSEM data.
The data also suggests that the attention paid to income inequality may have been misplaced, said Professor Julian Disney, chairman of the National Summit on Housing Affordability.
Bigger problems were in wealth, he said.
"Inherited inequity, which is probably the thing we've fought hardest to cut down over the past 100 years - to try to give everyone a reasonable chance at birth - is really going to increase very greatly."
The richest fifth of the Sydney population are each worth $864,000, nearly two-thirds of which is in their homes. But in Melbourne the richest fifth were worth $667,000, of which just over $300,000 was in their homes. It also had a 74 per cent home ownership rate, higher than the national average of 67 per cent.
The surge in the share of wealth tied up in housing shows up in the fact that average Australians are worth $229,000, of which $128,000 is in the home. Ten years ago they were worth $129,000, of which only $47,000 was in the home.
Macquarie Bank interest rate strategist Rory Robertson explains the change: "If you owned two or three houses you just got a massive windfall; if you owned one you're basically square and if you owned none you just got screwed. And that, to some extent, was just an accident."
The Productivity Commission's report on housing affordability, published last month, urged a review of the tax treatment of housing investment - especially the 50 per cent discount to the capital gains tax.
July 9th, 2004, 10:46 PM
Some more good news on the property market in Victoria.
First buyers back
FIRST home buyers are returning to Victoria's property market.
Their ranks swelled almost 8 per cent in May, according to the first housing finance data for the period since the introduction of the $5000 first home bonus.
The Australian Bureau of Statistics figures
show 1786 first-timers secured home loans in May, up from 1658 the previous month.
They enjoyed their biggest share of home-buying action in more than a year, making up 16.2 per cent of Victoria's home buyers.
But while loans to first home buyers rose, overall there was a 4.5 per cent fall in owner-occupier buyers in Victoria.
Owner-occupiers fared a little better on the national scene, with loans to them dropping 2.6 per cent in seasonally adjusted terms.
The total value of home loans around the nation also took a tumble, slipping 1.5 per cent to $15.5 billion.
Loans to property investors also shrank in value, down 2 per cent to $5.7 billion.
Nationally, first home buyers made up 14.1 per cent of buyers and they borrowed an average $172,500.
Victorian first home buyers borrowed an average of $198,000, down $700 from April.
NSW first home buyers were the biggest borrowers, with an average loan of $251,300.
The average size of a home loan in Australia in May was $204,000, up from $201,800.
Master Builders Australia chief executive Wilhelm Harnisch said the first home buyer increase was the one spark in a subdued market.
July 9th, 2004, 11:26 PM
I cant help thinking that all that debt swirling around the Sydney property market is is not a good thing afterall this "wealth" is a paper debt and is very vunerable to even the slighest downturn in the economy.
I would rater be in Melbourne's and the other capital cities position than Sydney's if the shit ever hits the fan economicalliy so to speak.
July 27th, 2004, 02:33 PM
Factory outlets rile city retailers
City shops have criticised factory outlet developments in the CBD, predicting the competition with discounted fashion retailing could damage their businesses.
Factory outlets, which offer up to 70 per cent off Australian and international labels, are due to open at Spencer Street next year and Docklands in 2006. Direct Factory Outlet (DFO) owner Austexx is taking up 27,000 square metres as part of the $700 million Spencer Street Station redevelopment.
Waterfront City's joint venture partners, ING Real Estate and the Lewis Land Group, will dedicate about 20,000 square metres for direct brand outlets.
A number of traders have raised concerns with the Melbourne City Council, saying they oppose further discount retailing in the CBD.
Councillor Irene Goonan said the council was trying to promote Melbourne as a world-class shopping destination and questioned whether factory outlets fitted with this image. "Are we really getting the best retail for our city?" she said. "We boast that Melbourne is the fashion capital of Australia and we want to keep the standard of our top designers, top boutiques and top world labels," she said.
A Swanston Street retailer, who wanted to remain anonymous, said world-class shopping and factory outlets were a mismatch. "Do the famous shopping strips of Milan and Paris have factory outlets?" he said.
Kate Mallyon, manager of the Original Levi's Store on Swanston Street, opposes factory outlets. "We already have Victoria Market selling Levi's cheap, we have David Jones and Myer to compete with, and anything more is going to be detrimental," she said.
The national store development manager of Sportsgirl and Sussan, Rowan Lodge, said a factory outlet in the Perth CBD had affected shops there and he was concerned it would happen in Melbourne.
Mr Lodge said DFO at Spencer Street was the main problem because it was trying to attract city workers. "It's certainly likely to split the customer," he said. "Whereas if they are out at Moorabbin they are not taking away from that city retailer."
But Myer spokesman John Gillman welcomed the factory outlets, saying it would attract more visitors to the city. "It really just adds to the retail mix," he said. "Factory outlets generally don't have new season merchandise . . . and people shop at Myer for the latest fashion."
Cr Goonan also expressed concern over the Spencer Street DFO because it was next to a railway station. She said a similar model in Japan failed because people did not have time to stop and shop.
But Austexx/Direct Factory Outlets chief executive Geoff Porz said the claim was "absolute nonsense" because some of the most successful shopping centres in the world were near railway stations, and the Government's Melbourne 2030 strategy encouraged shops near transport hubs.
He said leases for 122 shops in the Spencer Street DFO had been taken up. "The owners of the big international and national brands thinks it's viable because they have all signed up to leases, and the State Government sees it as viable," he said. "We are not relying on train commuters . . . our primary catchment is people who work and live in the city and the inner suburbs."
"As far as I'm concerned Swanston Street and Bourke Street Mall are an absolute disgrace in terms of their amenity and quality. What we are offering is something far more superior, along the lines of what QV, Melbourne Central and the GPO are doing."
July 28th, 2004, 03:22 AM
Factory outlets are vile ......
July 28th, 2004, 04:46 AM
im in two minds... if you live in docklands u should be rich but at the same time you shouldnt have to drive to discount stores
July 29th, 2004, 03:23 AM
Collins St up with big boys
Melbourne's Collins Street is flexing its muscle as a prime retail address. Rents in the street are starting to edge out other prime CBD precincts.
According to a new tenancy survey, Collins Street is now equal-second for the highest shop rents in Melbourne, tying with Swanston and Elizabeth Streets, compared with its usual fourth place.
The research division of property agent FPDSavills said that Collins Street rents averaged between $1250 and $2250 a square metre, second only to Bourke Street Mall, Melbourne's longstanding king of retail, where the going rates can be as much as $5000 a sq m.
HSBC Asset Management is the latest beneficiary of the resurgent demand for Collins Street retail, having finally leased out the last retail space at the former Colonial Group head office building, which has undergone a $30 million refurbishment.
HSBC has confirmed that shoe retailer Figgins Holdings, which trades as Florsheim, and a health fund, Hospital Contribution Fund of Australia, had taken the space at the base of the office tower.
The two retailers will join menswear store Henry Bucks and National Australia Bank at the property.
Leasing agents Knight Frank and FPDSavills did not disclose the rents on the latest deals, other than to say they were consistent with current rates.
HSBC bought the run-down office building and adjoining sites at 330 Collins Street from Colonial in 2001 for almost $70 million. The redevelopment was considerably delayed after asbestos was discovered on the site. NAB is the principal tenant on the upper office floors, with a lease for 6000 sq m.
Some 11,000 sq m of office space is still vacant.
The new shoe store in the HSBC building should help to overcome a shortage of these retailers in the Melbourne CBD, the tenacy survey found.
FPDSavills national research manager Marc Pallisco said the new shop would take footwear retailing to just 5.5 per cent of the CBD category mix, compared with a heavy weighting of clothing stores
July 29th, 2004, 11:17 AM
one thing I would like to see happen on collins street.... THE 'MACCAS' CLOSE!!