Demand for investment stock in Leichhardt’s Norton Street

NORTON Street in Leichhardt has gone through much change over the past 20 years, but demand remains for investment stock on the strip, according to Ray White’s latest Between the Lines* report.

“Once considered the ‘Little Italy’ of Sydney with a thriving restaurant and café scene, this market has been hit by many factors which over time, has eroded the vibrancy of the strip,” said Ray White Head of Research Vanessa Rader.

Ray White Commercial surveyed the street fronting retail tenancies along the strip which extends from Parramatta Road to Allen Street to determine the current vacancy and mix.

“The survey includes 140 retail tenancies with a total retail area of over 18,000sq m,” Ms Rader said.

“Currently, the vacancy has been determined at 10.82 per cent, highly concentrated on a number of long-term vacancies of adjoining shopfronts on the northern end of the strip and others throughout.”

“The mix along the strip is wide in its uses, moving away from the heavy weighting of food tenancies which the strip historically was known for.

“Cafés and restaurants account for just over a quarter of all floorspace with a wide mix of eateries including Italian and various Asian cuisines.

“Specialty food also accounts for 5.88 per cent due to several specialty cake, bread and coffee locations dotted along the strip.

“Services are now the dominant use across Norton Street, notably on the southern end of the strip on the western side, where a number of commercial terraced properties are located.

“A high number of medical uses are seen in this location in addition to beauty services such as hair, nails and massage occupying many shop fronts, while banks also enjoy a few larger tenancies in this location.”

Ray White Commercial NSW – Sydney City Fringe Principal Kristian Morris said despite the difficulty in occupancy for some tenancies along Norton Street, it had not hampered demand for investment stock.

“Norton Street is a tightly-held market by local private investors with limited retail stock entering the market for sale,” Mr Morris said.

“Those few strip locations which have sold over the past two years have enjoyed yields as low as three per cent on a fully-leased basis.

“Rents have been revised downward over the last 10 years. Retail premises can attract a broad range depending on size, location and quality, currently averaging between $330-$700psqm net.”

*Ray White Between the Lines Commercial Research – Norton Street, Leichhardt Retail Strips – August 2019.