How is Adelaide’s retail supply pipeline faring?

Nearly 30,000sqm of retail space is currently under construction.

In  a report, JLL said the retail supply pipeline in Adelaide is expanding and over the past year, five new neighbourhood shopping centres completed, adding 18,200 sqm of consumer staples-oriented retail to the market.

“There is 26,700 sqm of retail space currently under construction, with the latest project due for completion in Q1 2025. In addition to projects already under construction, there are five projects with plans approved, totalling 39,300 sqm,” the report added.

Here’s more from JLL:

South Australian retail spending continued to trend downwards with growth slowing to 3.7% y-o-y in March 2024 versus 5.2% in December 2023. Spending at cafes, restaurants and takeaway services remained very strong, with growth of 9.0% y-o-y.

National fashion retailers and hospitality groups continued to secure new high profile retail space in Adelaide CBD’s Rundle Mall.

Rents and yields broadly stable in Q1 2024

Average rents across most sub-sectors were broadly stable, with minor growth over the quarter. Retailer demand for space remains resilient and incentives continue to be a key lever in lease negotiations with national retailers.

Yields across most sub-sectors were unchanged over the quarter, except the regional and CBD sub-sectors, which softened 12 bps and 13 bps, respectively.

Outlook: Discretionary retailer vacancy at risk

Vacancy risk in centres with exposure to more discretionary retailing is expected to increase over the short to medium term as consumer purchasing power decreases, due to heightened cost-of-living pressures.

Investor demand for defensive retail assets like neighbourhood centres and stand-alone supermarkets is expected to continue increasing due to its non-discretionary nature. However, as broader economic conditions are set to stabilise in 2024, investment volumes are also expected to increase for assets in the other sub-sectors.

Note: Adelaide Retail refers to Adelaide's overall retail market.