Sydney to see 60,000sqm of new retail stock by end-2023

Over 60% of the stock will be neighbourhood centres.

Only one development in Sydney totalling 15,000 sqm of retail space, Box Hill Town Centre, reached completion in 1Q23 according to JLL. 

The supply pipeline for 2023 is low with approximately 60,000 sqm of new stock forecast to reach completion by year-end, 65% of which are neighbourhood centres, said JLL in a report. The remaining are LFR (23%) and CBD (12%). However, an uptick in supply is expected in 2024 with 139,000 sqm of supply set to come online.

Here’s more from JLL:

Driven by some tenants relocating into neighbourhood and sub-regional centres, regional rents declined by -0.5% q-o-q in 1Q23. Given the reduced severity of q-o-q rent declines, CBD rents are likely to soon reach a point of equilibrium where rents stabilise.

All sub-sectors recorded a 25-bps yield softening except for the sub-regional sub-sector, which recorded a 13-bps q-o-q softening.

Outlook: Price equilibrium between buyers and vendors anticipated

As yields continue to soften, a price equilibrium between vendors and buyers is expected to be met in the medium term.

Despite the outlook for interest rates being revised down from initial expectations of the cash rate exceeding 4% by mid-2023, due to larger macroeconomic factors including banking instability in USA and Europe, consumer sentiment is expected to further dampen.

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