Perth to see 16,800sqm of new retail supply by 2025

This is from two major developments.

According to a JLL report, Coles Yanchep reached completion, adding 3,600 sqm to the market in the fourth quarter of 2023. Over the last 12 months, completions totalled 42,900 sqm, well below the 10-year average of 74,900 sqm.

“There are currently two major developments under construction and forecast to add 16,800 sqm by 2025. In addition to projects already under construction, there are eleven projects with plans approved totalling 236,200 sqm and two projects on hold totalling 52,500 sqm,” the report said.

Here’s more from JLL:

WA retail spending recorded growth of 5.1% y-o-y in November 2023 versus 6.3% in August 2023. Spending at cafés, restaurants and takeaway recorded the strongest performance of all categories, with growth of 8.4% y-o-y in November 2023. The pre-Christmas period also saw increased spending at department stores, with growth of 8.4% y-o-y.

The overall CBD retail vacancy rate increased 0.9 percentage points (ppts) to 21.0% in H2 2023. The rise in vacancy can be primarily attributed to a higher number of vacancies observed in strip malls, while vacancies in enclosed shopping centres showed a decline. In an effort to promote higher foot traffic, several activation events have been held in the CBD.

Rents stable across all sub-sectors

Average rents recorded no changes across all sub-sectors during the quarter. Modest q-o-q rental growth has been evident across most sub-sectors over the last two years, after declining over the two-year period up to 2022.

Investment volumes fell significantly over the quarter, totalling only AUD 54.5 million across two major transactions. In the largest sale of the quarter, 96 and 110 William Street, and 255 Murray Street Mall, sold for AUD 48.0 million. The asset comprises three tenanted buildings, with development potential.

Outlook: Retail spending growth to moderate

Retail turnover growth is expected to remain subdued as households continue to reduce discretionary spending in response to persistently elevated inflation and higher interest rates.

Due to the combination of elevated construction costs and a projected slowdown in economic conditions, it is anticipated that construction activity will slow in the short to medium term.

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