Adelaide retail stock underperforms 10-year annual average

Only 18,800sqm of new stock was added over the past year.

In a report, JLL said one major retail completion was recorded over the third quarter in Adelaide, totalling 6,000 sqm. Over the past 12 months, four retail centres completed, adding 18,800 sqm of retail to stock; significantly below the 10-year annual average of 37,700 sqm.

“There is 29,300 sqm of retail space currently under construction, with the largest project being an extension to Burnside Village. In addition to projects already under construction, there are three projects with plans approved, totalling 23,900 sqm,” the report said.

Here’s more from JLL:

SA retail spending recorded growth of 2.0% (year-on-year) in September 2024 versus 2.5% in June 2024. Spending in the other retail category, which include recreational goods retailing, recorded the strongest performance (5.0% year-on-year).

Increased leasing activity was observed in the quarter for food and beverage operators in the Adelaide CBD, especially along Gouger Street. National fashion retailers also remain active, securing new high profile retail space in the city.

Rents broadly stable over the quarter

Average rents across most sub-sectors were broadly stable in Q3 2024, with the exception of the large format retail sub-sector, where rents were up 2.0%. Retailer demand for space remains resilient, especially in suburban areas.

Yields across all sub-sectors were unchanged over the quarter. On an annual basis, yields across most sub-sectors were also stable, except for the regional and CBD sub-sectors which softened 75 basis points (bps) and 13 bps, respectively.

Outlook: Rental growth expected to accelerate in the short term

Rental growth is forecast to accelerate in the Adelaide market, especially in the regional sub-sector, underpinned by strong existing tenant demand trends.

Investment volumes are expected to improve in the short term as interest rate expectations have been revised lower over the next 12 months.