Perth retail completions still well below the 10-year average
Completions only totalled 71,200sqm over the past 12 months.
Only one significant retail space was completed in Perth in Q2 – the Southern River Shopping Centre (7,272 sqm). Over the last 12 months, JLL said completions totalled 71,200 sqm, below the 10-year average of 82,200 sqm.
There is a further 49,300 sqm of projects currently under construction and due to complete in 3Q22.
Here’s more from JLL:
There is a strong supply pipeline beyond the projects already underway. A further six projects have plans approved, totalling 71,300 sqm. There are four projects on hold with development approval (111,300 sqm), awaiting significant improvement in retail conditions before proceeding.
CBD rents remain under pressure due to increased vacancy risk
Average rents continued to decline across the CBD subsector over 2Q22 as tough market conditions persisted and landlords attempted to combat elevated vacancy levels. All other subsectors recorded marginal increases in quarterly rents. Anecdotal reports indicated that incentives continued to lead rent negotiations across most subsectors.
Investment volume strengthened over 2Q22, more than doubling the reported figure in the previous quarter. The largest sale in the quarter was the purchase of Carillon City Shopping Centre by Fiveight (a WA-based property company) for AUD 80.0 million, from Dexus Wholesale Property Fund (an unlisted property trust).
Outlook: Further rental declines and elevated vacancy rates likely
Elevated vacancy rates and retailer store rationalisation plans are forecasted to place further downward pressure on rents.
The recent reopening of the WA border is expected to benefit the retail market, with an increased pool of investors looking to capitalise on investment opportunities. Investment demand is expected to be attracted to the defensive nature of supermarket-anchored neighbourhood centres, while sub-regional and regional centres may draw counter-cyclical investors.
Note: Perth Retail refers to Perth's overall retail market.