Moderate rental growth recorded in neighbourhood and sub-regional centres

• In Queensland, retail turnover has increased 0.5% month-on-month in May 2024. Seasonally adjusted retail turnover reached AUD 7.4 billion in May, an increase of 1.5% or AUD 207.3 million year-on-year.
• Overall retailer demand in South-East Queensland was stable, but positively leasing activity has continued for well performing CBD and regional centres. However, interest from new entrants remains subdued, in response to slowing consumer demand.

Two new retail developments reached completion across South-East Queensland

• Two South-East Queensland retail developments reached completion over the quarter, adding 30,852 sqm onto the market. A 23,152 sqm large format retail centre opened in Brisbane’s south, and a 7,700 sqm neighbourhood centre opened in Thornlands.
• There is currently 84,231 sqm of retail space under construction in South-East Queensland, set to complete by 2026. Another 88,467 sqm has obtained planning approval, however construction has not commenced.

Yields remained stable across all sub-sectors

• Rental increases were recorded among sub-regional and neighbourhood centres, the non-discretionary focus of these centres has enabled modest growth in Q2 2024. Rents remained stable in other retail sub-sectors.
• Yields were stable over the quarter, regional centres remained the tightest sub-sector with a median yield of 5.75%.

Outlook: Queensland retail trade growth is likely to remain positive, albeit grow at a slower pace

• The supply pipeline is expected to slow in the next 12 months, as elevated development costs and economic pressures continue to reduce construction activity.
• South-East Queensland retail yield softening is likely to reach its cyclical trough in the near term.