- High-end F&B has made a strong post-Covid recovery
- Leasing activity has increased for premium operators
- A Surry Hills warehouse has hit the market
In the latest wrap of Sydney commercial activity, the food and beverage sector is enjoying happy hour as tenant incentives up to 30% of rent are locked in and sales recover to above pre-pandemic levels.
An attractive warehouse space has also whet the appetite, with the mixed-use property expecting fetch north of $50 million.
Expansions in order, as restaurant recovery strong
The F&B post-Covid recovery has been particularly strong among high-quality and higher-end operators, with the latest from Knight Frank suggesting last drinks won’t be called any time soon.
Knight Frank’s Associate Director Retail Leasing Adam Tyler said the high-calibre restaurant groups in Sydney had been best placed to hit the ground running following lockdowns, and had capitalised on better commercial deals for space over the past 12-18 months.
Among the other drivers of the strong recovery for premium operators, new norms such as pre-payment and credit card secured bookings, providing greater certainty over income and covers, said Tyler.
“Fixed sittings are also now the standard for top-tier restaurants, and with greater certainty, restauranteurs are able to flip their tables several times per night with a guaranteed income.”
The best of Sydney’s dining scene did well post-lockdown, with the right mise en place giving them a head start:
“Top-tier restauranteurs had staff ready to go following lockdowns and as a result, they were able to hit the go button faster and take advantage of higher vacancy rates and with it, better Tenant incentives,” said Tyler.
“Not only are food and beverage businesses benefiting from potentially better commercial deals, since COVID, some operators have also had better income levels.”
Sydney’s finest establishments have also been able to recover to above-pre-Covid levels, with the cash registers digesting some hearty figures:
“On top of this, spend per head was up, with many food and beverage tenants reporting they have better turnover since COVID,” said Tyler.
“Many operators have been so successful they are expanding their venues, leasing more space to open more eateries.”
Among the latest Knight Frank leasing transactions:
- 4-6 Bligh Street – Liquid & Larder has leased a 369.9sq m space from landlord Holdmark. The venue will be the group’s fifth venue in Sydney, and is set to open in the second half of this year.
- 171 Clarence Street – The Bentley Group has leased a 276sq m space from landlord Terraform Capital. This will be the group’s fifth venue in Sydney.
- 9 Castlereagh Street, Sydney – The Grounds of Alexandria has leased 250sq m from landlord Charter Hall. This will be the group’s fifth venue.
- 92 Pitt Street – Swillhouse Group has leased a 452sq m space from City Freeholds. The venue will be the group’s seventh in Sydney.
- 89 York Street – Pinky Ji has leased a 300sq m space from Fife Capital, with the restaurant recently opening. This is the second Sydney restaurant for Jessi Singh, who has already opened restaurants in Melbourne, Adelaide and Byron Bay.
- 66 King Street – The Charles by Etymon Group has leased 1,045sq m from a private landlord, which is one of four venues for the group.
Knight Frank figures noted leasing rates for the deals ranged between $800 to $1,500 per square metre, with incentives between 20% and 30% of rent.
Tyler added that: “The western corridor of the CBD – that is, York, Clarence and Kent Street, also known as the YCK precinct – has become the go-to food and beverage precinct for Sydney’s best small bars and restaurants.”
Surry Hills warehouse hits the market
A unique combination of creative warehouse tenancies and apartments has come to market at 276 Devonshire Street in Sydney’s coolest neighbourhood of Surry Hills.
The property features a fully refurbished creative warehouse space across multiple levels and 13 residential apartments completed just three years ago with expansive rooftop amenities.
Located on the fringe of the Sydney CBD, the property is said to benefit from the Tech Central precinct, and improved infrastructure and transport connectivity through the light rail system and Central Station.
The Colliers team of Miron Solomons, Matt Pontey and James Girvan have the exclusive listing, with price expectations north of $50 million.
“This outstanding asset that pays homage to the history of the region is the best example of a repositioned heritage warehouse in Surry Hills that we’ve seen to date,” Solomons said.
“With cash rates holding this month and the advantageous nature and resilience of the CBD fringe market, we expect to witness strong levels of enquiry as investors see the relative safety of such a high-quality asset,” Girvan said.
The property has a fully leased income of circa $2 million and net lettable area of approximately 2,231 square metres. It is occupied by distinguished tenants including 3XN Architects, software company Dovetail, and Provider Choice, a disability services and support organisation.
