Lease enquiry levels maintaining slow growth

• SA retail spending continues to remain low, recording growth of 2.2% (year-on-year) in December 2024 versus 2.0% in September 2024. Spending in the other retail category, which includes recreational goods retailing, recorded the strongest performance (4.8% year-on-year).
• Slow leasing activity was maintained this quarter for national fashion operators in the Adelaide CBD. Food and beverage retailers remain active, securing new high profile retail space in the city and suburban areas.

No major completions are recorded over the quarter

• No major completions were recorded over the quarter in Adelaide. Over the past 12 months, only two retail centres completed, adding around 9,900 sqm of retail to stock; significantly below the 10-year annual average of 37,700 sqm.
• There is around 36,200 sqm of retail space currently under construction, with the largest project being an extension to Burnside Village. In addition to projects already under construction, there are two projects with plans approved, totalling 19,300 sqm.

Marginal rental growth during Q4 2024

• Average rents across most sub-sectors were broadly stable in Q4 2024, with the exception of the large format retail sub-sector, where rents increased 2.0%. High construction costs persist and retailer demand for space in this sub-sector remain resilient.
• Yields across all sub-sectors were unchanged over the quarter, except the sub-regional sub-sector, which tightened 25 basis points (bps). On an annual basis, the regional and CBD sub-sectors softened 12 bps and 13 bps, while the sub-regional sub-sector tightened 25 bps.

Outlook: Steady rental growth anticipated in the short term

• Rental growth is forecast to increase steadily in the Adelaide market, especially in the regional and neighbourhood sub-sectors, underpinned by existing tenant demand trends.
• Investment volumes are expected to improve in the near term as interest rate expectations have been revised over the coming months and the broader economic environment continues to stabilise.