Standing by for sales take-off

With only four weeks until Christmas Day, landlords and tenants are expecting a rise in sales, albeit off a low base.

With only four weeks until Christmas Day, landlords and tenants are expecting a rise in sales, albeit off a low base.

With the rise in internet shopping and increased overseas travel for the January holidays, competition for the household dollar remains tough for the traditional bricks and mortar stores.

Giving retailers and landlords some comfort was the recent Westpac/Melbourne Institute index of consumer confidence which rose by 1.9 per cent to 110.3 points in November, near three-year highs.

The survey showed that confidence rose in NSW, Western Australia and Victoria - but fell in South Australia and Queensland.

Mark McInnes, the chief executive of Premier Investments, said with the lower interest rates, he was hoping for an improved Christmas trading period.

"But retailers never really know until December shopping starts in earnest," Mr McInnes said.

According to agents, following a strong start to the year, overall retail trade has been soft in 2013.

In its September quarterly update, Westfield said sales in Australia remained challenging, but was showing some signs of improvement in the lead-up to Christmas.

However, the landlord said the re-leasing spreads - rents for new leases - were still about 6 per cent lower than for existing tenants.

Agents at Colliers said in general, the negative leasing spreads are being driven by the annual increase mechanism built into specialty leases, which have not been supported by growth in market rents.

They said the leasing environment will remain challenging over the next 12 months. The reported occupancy cost ratios also show no signs of abating, despite the emergence of negative spreads.

Michael Bate, director of retail at Colliers International, said retail sales growth continued to underperform, with the rate of growth over the course of the year nearly halving longer-term trends.

In a report from Colliers International, it says landlords are increasingly sharing the risk associated with slower retail turnover growth.

"The number of tenants on holdover has increased and specialty vacancies are still being masked by the high occupancy of anchor tenants," the report says.

"While vacancy rates have increased, leasing activity has been steady reflecting the increased rate of tenant turnover. This will be an ongoing theme for the retail sector, as negotiations between landlords and tenants remain challenging."

Mr Bate said the strongest performing sectors continue to be fresh food, take-away food, services and convenience goods retailers.

"Figures from Bank of America Merrill Lynch suggest that the major listed retailers opened nearly 200 new stores (net) across the 2012-13 financial year, indicating continued steady demand for stores. Rollout programs continue across most retail categories, but are more focused on high foot traffic locations."

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