Melbourne retail completions underperform 10-year average | Real Estate Asia

Melbourne retail completions underperform 10-year average

Only one project was completed in Q1.

According to a JLL report, Melbourne saw one completion in Q1 2025 totalling 4,300 sqm as the result of one new neighbourhood centre in the city’s north-west. Quarterly completions fell below the ten-year historical average of 22,800 sqm by 81%, having only fallen below by 1% in Q4 2024.

As of Q1 2025 there is currently 77,900 sqm under construction in Victoria with 42,300 sqm forecast to be completed by end-2025, of which 41% is in Neighbourhood projects.

Here’s more from JLL:

Victoria’s year-on-year retail trade growth in March was recorded at 3.3%, above the national average of 3.1%.

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Retailer demand increased in Q1 for food and beverage outlets, but fashion and general retail demand continue to decrease. Although overall demand remains stable, retailers are still risk averse and focusing on securing favourable rents in optimal locations.

Sub-regional yields tightens by 25 bps

Subregional yields tightened by 25 bps to 6.25%. All other sub-sector mid-point yields remain stable in Victoria. As a result of this tightening, LFR is the highest-yielding sub-sector at 6.38% and the Neighbourhood remains the lowest-yielding sub-sector at 5.75%.

Quarterly transactions totalled AUD 531.6 million across seven transactions, 14% higher than Q4 2024.

Outlook: Food and non-discretionary-related spending are expected to continue to drive retail turnover

Regional, Neighbourhood and LFR yields are all forecast to tighten slightly by 12.5 bps over the next 12 months. Sub-regional and CBD subsectors are expected to remain stable.

Food and non-discretionary-related spending are expected to continue to drive increased retail turnover and retailer demand.

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