There is a battle royale looming in the Sydney central business district as to which street, Pitt, George or Castlereagh, will be crowned as the "One", for rents, vacancy and tenants.
Dubbed the battle of Sydney's Prime Streets, it comes as the city is in the midst of a building boom, with offices, and the ground floor retail, being upgraded, apartment blocks in the planing stages and major infrastructure work, such as the pedestrianisation of George Street.
As a consequence, as the retail space is improved, it is attracting a new wave of brands, which are clustering, according to their genre, be it fast fashion, luxe items and accessories, and food. Technology groups and banks are not far behind in snapping up prime sites.
According to Knight Frank's senior director of retail leasing, Alex Alamsyah, between 2015 to 2020, the battle of these three major streets will become intense. It will also spill over to Martin Place and King Street, as the new office developments take shape.
"The contestants are as follows: Pitt Street Mall (the most expensive retail strip in Australia); George Street (the Sydney's answer to New York's Fifth Avenue) and Castlereagh Street (the undisputed leader of luxury strip in Australia)," Mr Alamsyah said.
"Pitt Street Mall will still hold the title of the most expensive retail strip in Australia for a very long time, as the Mall is very short (just one block from Market to King Street); limited supply will push the rent up and up; and all major retailers from Zara, Sephora, to H&M are there."
Reflecting the demand along the strip, Knight Frank is now finalising a new deal in the Mall which will be in the ballpark of $16,000 to $18,000 per square metre per annum.
In the latest Cushman & Wakefield Streets of the World survey, Pitt Street Mall, was named as the sixth most expensive, behind Upper Fifth Avenue in New York, Causeway Bay in Hong Kong and the perennial Avenue de Champs Elysees in Paris.
Mr Alamsyah said the George Street pedestrian zone, which will become the George Street Mall, will be very long (five blocks from Bathurst to Hunter Street) and will be a mix of fashion, food, technology and banking, such as Apple, Telstra to HSBC and the high end Louis Vuitton.
"George Street rents will increase significantly and the gap with Pitt Street Mall rents will be smaller," he said.
It is understood Knight Frank is now finalising several major new deals in George Street in the ballpark of $6000-$8000 per square metre (sq m) per annum.
This strip will also be boosted by the planned projects, including Mivac and Coombes family's 505 George Street, which will be apartments on top of the cinemas, with retail at street level. This will be a mix of food and some "fast fashion" outlets.
Zelman Ainsworth, senior manager, retail services at CBRE in Melbourne, said the new residential developments in capital cities, will also attract the major supermarkets which are looking for smaller, convenience style outlets.
"We are seeing strong demand from food and convenience retailers, who want to be near the apartments and cater for late night shopping or 24-hour shopping, that comes with high rise residential living," Mr Ainsworth said.
Mr Alamsyah said the next most interesting streets to watch where Castlereagh/King Streets and Castlereagh/Martin Place.
Knight Frank has secured 1000 sqm (over three levels) for the Cartier flagship store at 74 Castlereagh Street and are now working on their next project of 1500 sq m (over 4 levels) in the Trust Building at 72 Castlereagh/155 King Street (corner of Castlereagh/King Streets).
"Castlereagh/King Streets will be the undisputed leader of luxury strip in Australia," Mr Alamsyah said.
"Starting from Prada/Gucci at Westfield Sydney, then the forthcoming Cartier flagship store, followed by the proposed new super luxury tenant at the Trust Building, to Chanel at 70 Castlereagh Street and Dior at 153 King Street, among other big names, it will be the most powerful luxury corner in Australia," he said.
The remix of the MLC Centre in Martin Place, will also reinvigorate the area, with 60 Castlereagh Street and the Tiffany & Co tenancy at 39 Martin Place, all to be upgraded.
