Pharmacy Daily | Pharmacy rental growth constrained

SEVERAL years of hard work engaging with Pharmacy Guild members and their landlords about shop rentals appears to be paying off, according to the newly released 2020 Pharmacy Rental Report from the Pharmacy Guild of Australia.

The latest results indicate that the efforts were "paying dividends in managing rental and occupancy costs for the pharmacy sector," said Rental Report contributor, Phil Chapman of Lease1.

"In 2016 we reacted to the inflation of rental trend through a concentrated education and engagement program," he said.

Guild members reacted and weighed in with information which was collated and used for strategic engagement with landlords.

In 2018 the growth trend observed between 2015 and 2017 was reversed, and this has continued into last year, with average gross rents (base rent + outgoings) only increasing by 0.62%.

Chapman said the figures also indicated that the result for average occupancy cost ratio (gross rent/sales %) had "virtually flat-lined" at 0.4%, which was particularly pleasing because this figure is the "true measure of the performance of the real estate under lease, as it compares the cost of the lease to sales and how the real estate performs for the business".

The outcome was significantly slower growth than the 2% increase in the Consumer Price Index (CPI), while average sales growth also exceeded CPI.

However while the overall average result was pleasing, Chapman noted that pharmacies located in rural areas experienced a hefty 5.05% increase in gross rents.

"Focus needs to remain on all members, raising the effort with their engagement to landlords in reducing occupancy costs, and a strategy needs to be developed to provide rural members the resources to deliver similar results to the overall Rental Report to maintain these positive trends into the new decade," he concluded.

Guild members can now access the full report via the online portal.