Perth retail completions underperform 10-year average

There were only 28,900sqm completions over the past year.

According to a JLL report, over the last 12 months, retail completions in Perth totalled 28,900 sqm, well below the 10-year average of 74,100 sqm.

“There are currently five major developments under construction, forecast to add 36,100 sqm by early-2026. In addition to projects already under construction, there are ten projects with plans approved totalling 144,700 sqm and two projects on hold totalling 52,500 sqm,” the report said.

Here’s more from JLL:

WA retail spending recorded growth of 3.6% y-o-y in March 2024 versus 4.8% in December 2023. Spending on the Other retail category recorded the strongest performance, with growth of 6.0% y-o-y in March 2024. WA also recorded increased spending at cafes, restaurants and takeaway, with growth of 5.1% 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. To promote higher foot traffic, the City of Perth has held several activation events in the CBD.

Rents were stable across all sub-sectors in Q1 2024

Average rents recorded no changes across all sub-sectors during Q1 2024. Nevertheless, modest q-o-q rental growth has been evident across most sub-sectors over the last two and a half years, after declining over the two-year period up to 2022.

Investment volumes fell significantly, with no major transactions recorded over Q1 2024. Over the last 12 months, investment volumes totalled AUD 820.1 million across 12 major transactions. The neighbourhood sub-sector comprised 75% of all transactions and accounted for 28% of investment volumes.

Outlook: WA retail spending growth to remain soft over the short term

Households continue to reduce discretionary spending in response to persistently elevated inflation and higher interest rates. As such, retail turnover growth is expected to remain subdued.

It is anticipated that construction activity will slow in the short to medium term due to elevated construction costs and a projected slowdown in economic conditions.

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