THE Haymarket/Chinatown precinct in Sydney has felt the effects of the COVID-19 pandemic but while vacancies were up, it was performing well ahead of the CBD average, according to Ray White Commercial’s latest Between the Lines* report.
Ray White Commercial’s Asian Investment Services have completed a primary research exercise to understand the size and tenancy mix of the Haymarket/Chinatown retail area.
“Over the last few months there have been a number of high-profile long-term tenants closing their doors feeling the effects of COVID-19, notably in the Chinatown precinct,” said Ray White Commercial Head of Research Vanessa Rader.
“Historically, this market operates with very few vacancies with high demand by retailers and restaurateurs to secure accommodation in this location.
“Our recent survey has revealed that currently, there are vacancies of 8.55 per cent, equating to 24 tenancies.
“While this rate is up, it is performing well ahead of the Sydney CBD average where prime vacancies trended in the six per cent to nine per cent range prior to the pandemic.
“These rates have more than tripled after being devastated by the changing activity levels of the CBD.”
“The changing vacancy situation and reduced foot traffic in this region have had a depressive effect on rental yields. Some newly vacant tenancies attract a 30-50 per cent discount on pre-COVID-19 rates,” Ray White Commercial Asian Investment Senior Asset Manager and Sales and Leasing Executive Samuel Gong said.
“Currently, smaller (sub-100sq m) prime located assets average net face rents between $2,000 and $2,500psqm, while more secondary assets could range from $1,500psqm depending on size.”
“We expect there will be greater downward pressure on these rates if vacancies continue to increase, particularly in those locations which are not underpinned by a strong local residential population,” said Head of Ray White Commercial Asian Investment Services Victor Sheu.
“On the investment side, the retail market in this precinct historically has been very tightly held with limited stock coming to the market.”
“Strong, private domestic and offshore investor market yields in recent years have been some of the tightest in all of Australia,” said Ray White Commercial Asian Investment Services Director Andrew Vines.
“Prime asset yield range can trend from 3.5 per cent to 5.5 per cent, however, may achieve above or below these averages depending on size, lease covenant, location, and quality of the asset.”