Retail turnover growth continues to gradually recover, despite a challenging retailer landscape

• Year-on-year retail turnover growth in NSW was 2.2% as of March 2025, below the national average of 3.1%.
• Fashion retailers Ally Fashion and Jeanswest have gone into voluntary administration, impacting 141 stores nationally. This is on top of Mosaic Brands going into receivership in late 2024, which will result in over 700 store closures.

The cost of construction remains elevated nationally

• No new retail space was added to the stock in the quarter. We are currently tracking 159,500 sqm of retail stock under construction across Sydney, which is scheduled to complete between 2025 and 2027.
• The low supply trend continues nationally, with several developers delaying development plans as a result of elevated construction costs, which is impacting their feasibility.

Strong investment momentum supports some yield compression

• Quarterly transactions totalled AUD 122.5, with the sale of Lake Macquarie Square accounting for all of this volume.
• LFR rents recorded the most significant year-on-year increase (3.9%).

Outlook: Uplift in income growth to continuing trickling through the sectors

• We are projecting further yield compression over the near-term across a number of sub-sectors.
• The cash rate futures market is currently pricing in further cash rate cuts in Q2 2025, with the potential for more substantial cuts to be made under the uncertainty of US imposed tariffs.