Perth retail rents to grow by up to 2.7% annually until 2028

The regional subsector is expected to see the biggest growth.

Despite the expected slowdown in WA retail spending over the short term, a JLL report said rents across all sub-sectors are forecast to increase an annual average of 1.8% to 2.7% from 2024 to 2028, with strongest growth anticipated in the regional sub-sector.

“Investment volumes are expected to remain elevated in the second half of 2024, with most activity expected to occur in the neighbourhood sub-sector due to the non-discretionary nature of these assets,” the report said.

Here’s more from JLL:

WA retail spending recorded growth of 3.1% year-on-year in May 2024 versus 4.0% in February. Spending in the other retail category, which include recreational and pharmaceutical goods retailing, recorded the strongest performance (5.0% year-on-year).

The overall CBD retail vacancy rate decreased 0.4 percentage points (ppts) to 20.6% in H1 2024. Higher vacancy was observed in high street retail, while vacancy in enclosed shopping centres showed a modest decline.

One neighbourhood centre completed in Q2 2024

Only one major development was completed in Q2 2024, totalling 4,700 sqm. Over the past 12 months, completions totalled 33,613 sqm, well below the 10-year annual average of 74,124 sqm.

There are currently five major developments under construction, forecast to add 42,600 sqm by Q1 2026. In addition to projects already under construction, there are 12 projects with plans approved totalling 158,526 sqm.

Strong investments volumes recorded over Q2 2024

Average rents recorded no changes across all sub-sectors during Q2 2024. Nevertheless, modest rental growth has been evident across most sub-sectors over the last two and a half years.

Investment volumes increased significantly, with six major transactions recorded over Q2 2024, totalling AUD 300.5 million. The largest transaction over the quarter was Maddington Central, which exchanged for AUD 107.0 million.