A report prepared by Opteon Victoria's Research Manager Richard Jenkins looking at the Geelong CBD Retail Market.

1. Geelong CBD Retail Study
April 2011
Economic Conditions
On a national level, retail turnover has grown modestly over the Victoria’s economic growth is forecast to continue to outstrip
past 12 months as higher interest rates, petrol and food prices Australian gains in the short term with real gross state product
have lead to consumers curbing their spending patterns. While growth (GSP) forecast to rise to 2.8% in 2011.
the Australian economy continues to recover, consumers remain
cautious despite solid wage growth and a tight labour market. Tenancy Mix
Retail sales data for February show that while Australian retail The Geelong CBD Core comprises 791 shops and totals
sales increased by 0.5%, surprisingly most of the increase 172,587m2 of retail floor space of which 41% resides in the
spending resulted from a rise in household good sales. Although shopping centres of Market Square and Westfield Geelong; with
non-food retailing rose by 0.9%, this increase failed to street frontage retail space accounting for 58% and arcade
compensate for January’s 1.1% contraction. Most retail sales retailing accounting for the remaining 1%.
categories recorded modest growth with only department stores
declining marginally over the month. Over the past 12 months, Overall, department store retail space totals more than
food retail sales increased by 5.8% compared with non-food 34,700m2 and accounts for approximately 20% of Geelong’s CBD
retail sales which increased by only 2.1%. retail market. In comparison to the Melbourne CBD, the Geelong
CBD has a higher exposure to department stores which is likely
Victoria remains one of Australia’s best performing states in due to a lack of Sub-Regional shopping centres in the Geelong
regards to retail turnover buoyed by solid population growth region providing this offering. Clothing, food retailing, footwear
which has led to significant housing construction. Over the year & soft goods exceed all other retail categories and accounts for a
to February 2011, total Victorian retail turnover grew by 2.8% further 26% of retail space in the CBD.
but like other parts of the country consumers decreased their
discretionary spending. Spending on electrical goods and Unsurprisingly, within the shopping centres of the CBD,
takeaway food contracted and other discretionary retailing department stores and clothing tenants dominate the tenant
categories such as clothing and department store spending mix accounting for more than 66% by GLAR (gross lettable area
witnessed only modest growth over the year. In contrast retail).
consumers sought “cheap” luxury goods with increased turnover
recorded in cosmetics and book sales. Geelong CBD Retail Tenancy Mix
Feburary 2011
Food Retailing
Dept. Stores
Retail Turnover by Industry Performance 8%
5% 4% 14% Clothing & Footwear
Index 2004-2011 Household Goods
8%
180 23% Recreational Goods
Food Clothing & Footwear 8%
Dept. Stores Cafes & Restaurants Personal Retailing
160
8% Hospitality
5% 17% Services
140
Entertainment
Other
120
Source: Opteon Victoria
100
80
In contrast, food and hospitality (hotels and bars) account for
Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 around 23% of all street frontage retail space in the Geelong
Source: Australian Bureau of Statistics and
Opteon Victoria CBD.
Consumer confidence remains optimistic, rising 1.2% up to Within the CBD several precincts have evolved over time with
105.3% in April. Although consumer confidence continued its food retailers making up 18% of all Ryrie Street tenancies,
rise in April, the index still remains below its rate in December particularly around Yarra Street and the cinema area. Whereas
2010 having fallen earlier this year as a consequence of a string around the western end of Ryrie Street, an agglomeration of
of natural disasters. Consumers continue to show restraint with serviced based occupants (such as real estate agencies) is
the majority more focused on savings with spending levels beginning to emerge, particularly around the intersection of
modest. Gheringhap Street.

2. Vacancy
Total vacancy (by gross lettable area) for the CBD Core as at Australia, Geelong’s retail strip retail levels are considered very
February 2011 is 8.3% which has decreased from its peak of affordable, if not low.
11.7% in June 2009. This is despite the expansion of Westfield
Geelong, completed in April 2008 which added approximately The Geelong CBD market has very limited exposure to
17,000 sq m or about 90 shops. institutional ownership and as such it was somewhat insulated
from the significant swings in value during and post the GFC
A number of streets in the CBD recorded a 0% vacancy rate which occurred in metropolitan markets. Average market yields
including: James Street and McLarty Place within the café and have remained relatively steady over the past 12 months ranging
arts precinct, whilst the new retailing/restaurant precinct along between 5-6.5% with private investors still dominating
Eastern Beach Road is fully occupied, interestingly at much purchases.
higher rents than achieved in the traditional CBD area.
Outlook
Geelong CBD Vacancy Rate
Vacant Shops
(GLAR)
Feburary 2011 Fundamentals supporting retail spending still exist. Real gross
20.0%
Total Vacancy - 8.3% 16.4%
state product (GSP) is forecast to rise by 2.8% in 2011, above the
16.0%
13.0% 2.7% growth achieved in the 2010 calendar year .
12.0%
8.0% Furthermore, retail turnover for Victoria is expected to increase
4.0%
1.8%
by 4.2% in 2011, just above the 4.0% growth recorded in 2010.
0.0%
Shopping Centres Street Frontage Arcades
In the short term, the vacancy rate for the Geelong CBD retail
Source: Opteon Victoria
market is expected to fall as more national tenants are likely to
be attracted to the Geelong market due to it’s “affordability”.
Within the CBD Core, vacancies with street frontage stood at The recent opening of MacPac and Witchery in the CBD are
13.3%, while vacancy within Geelong’s CBD shopping centres positive signs.
was a very modest 1.8%. Vacancy within Geelong’s arcades
totalled 16.4%, but this statistic is susceptible to volatility given The recent chorus of debate regarding the apparent demise of
the small amount of retail space within this category. the CBD has demonstrated one thing - the people of Geelong are
In terms of quality grades, more than 100,000m² of retail space passionate about their CBD. In the longer term, the future
within the Geelong CBD Core is classed as prime with its vacancy direction of the Geelong CBD will to some extent be determined
standing at 5.1%. In contrast, approximately 71,000m² of retail through the preparation of “Vision II” .
space in the Geelong CBD is classed as secondary with its
vacancy totalling 13.0%. Deakin University have made it public knowledge that they
would like to increase their student numbers in the city to
Rents & Yields 10,000 students and this would create a true “Univer-city” which
could be the impetus required to regenerate the city centre.
Despite the credit crisis of 2008 and an increase in the floorspace
of 10% to the Geelong CBD Core, surprisingly statistical data
indicates that CBD retail rents have steadily increased since
2005.
In fact, Geelong CBD street frontage rents have increased by an
average 10% during 2010. As at April 2011, CBD street frontage
speciality shop rents range between $200/m2 and $300/m2. By
comparison to other regional centres across Victoria and
Contact us for further information or to obtain the full report-
Richard Jenkins– Research Manager richard.jenkins@opteonvictoria.com.au
Main Contacts
Todd Devine– Director Commercial Services todd.devine@opteonvictoria.com.au
Level 1, 68-70 Gheringhap St, Geelong , VIC 3220
Office Address Ph: 1300 786 022
Website www.opteonvictoria.com.au
Email valuers@opteonvictoria.com.au
DISCLAIMER- This report is published for general information only. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no legal
responsibility can be accepted by Opteon Victoria for any loss or damage resultant from the contents of this document. As a general report, this material does not necessarily represent the view of Opteon Victoria
in relation to particular properties or projects. Reproduction of this report in whole or in part is not permitted without prior consent of, and proper reference to Opteon Victoria.