WA retail turnover growth continues to recede

• 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.

Confirmed supply pipeline increases, but remains below trend

• No major developments completed in Q1 2024. Over the last 12 months, completions 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.

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.