Lease enquiry levels increased over the quarter

• SA retail spending trends upwards over Q1 2025 increasing 2.6% (year-on-year) in March 2025 versus 2.2% in December 2024. The strongest year-on-year spending growth was recorded in the other store-based retailing category (6.1% year-on-year).
• An uptick in leasing activity was observed the quarter for national fashion operators in the suburban areas. In the Adelaide CBD, service operators and food and beverage retailers remain active, securing new high profile retail space.

No major completions in the Adelaide market

• No major completions were recorded over the quarter in Adelaide. Over the past 12 months, two retail centres have completed, adding 14,100 sqm of retail to stock; significantly below the 10-year annual average of 29,700 sqm.
• There is 37,900 sqm of retail space currently under construction, with the latest projects expected to complete by Q3 2026. Additionally, there are four projects with plans approved, totalling 43,700 sqm, and three projects with plans submitted, totalling 19,100 sqm.

Continued slow rental growth over the quarter

• Average rents across most sub-sectors were broadly stable in Q1 2025, 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 regional sub-sector, which tightened 12 basis points (bps). On an annual basis, the regional sub-sector tightened 12 bps, and the sub-regional sub-sector tightened 25 bps.

Outlook: Acceleration in rental growth anticipated in the short term

• Rental growth is forecast to accelerate in the Adelaide market, especially in the regional and neighbourhood sub-sectors, underpinned by existing tenant demand trends. The annual growth rate is expected to average 2.9% over the following five years.
• Projected further cuts in interest rates may improve investment volumes in the near term. Investors are likely to still be selective in terms of potential acquisitions, albeit to a lesser extent than 12 months ago.