Location important to buck retail market trends

The Property Council of Australia (PCA) has been told that despite a sluggish market, some retail stores are performing well and bucking market trends.

The successes of these stores is based on quality, trade catchment dominance and demographics.

Tony Doherty, the Australian head of retail at Jones Lang LaSalle, says that with commercial real estate, tenants are looking for prime locations in order to ensure their stores are given the best start possible.

"Consumers are not only being more selective about what they buy, but also where they buy. This has resulted in the diverging performance profile between prime quality centres and second tier centres," he said.

Property Observer reports that major shopping centres like Westfield have reduced its rent by six per cent in an attempt to ensure that not only does the retail sector remain competitive, but also that shops don't go broke.

"This is because, over the past five years, passing rents have risen in excess of market rents. That is, most of the fixed annual increases built into leases have grown at a faster rate than market rents," Doherty said.