Consumer confidence fell by 12.5% in April 2026

• NSW household spending increased 0.5% month-on-month in January 2026, with strong growth in miscellaneous goods and services (+3.4%), health (+1.6%), and clothing and footwear (+0.9%). Latest data from February marked a reversal, with NSW recording a 0.2% decline.
• This deterioration reflects consumer anxiety that was captured in the April 2026 release of the Westpac–Melbourne Institute Consumer Sentiment Index, which fell 12.5%.

2026 pipeline set to add significant neighborhood and LFR retail space

• Three completions totalling 32,700 sqm were delivered in Q1 2026: one new asset, ECQ Outlet (20,000 sqm), and two extensions – HomeCo Tuggerah (11,200 sqm) and Westfield Penrith (1,500 sqm).
• We are currently tracking 133,700 sqm of retail stock that is under construction across Sydney. The development pipeline is concentrated in neighbourhood centres (55,900 sqm), followed by LFR centres (44,700sqm).

Sydney achieved positive rental growth across all sub-sectors in Q1 2026, led by LFR’s 2.0% quarterly increase for the second consecutive quarter

• Gross rents increased across all subsectors during the quarter, ranging from 0.50% to 2.0%. Large format retail recorded the highest growth at 2.0%. Investment volumes totalled AUD 110.4 million across four assets in Q1 2026. The largest transaction was The Albany Crows Nest at 101-111 Willoughby Road, which sold for AUD 44.0 million. Yields remained stable across all sub-sectors.
• The vacancy rate in Q4 2025 contracted across most retail subcategories, except for sub-regional and large format retail, which marginally increased over the second half of 2025.

Outlook: Discretionary retail could face headwinds

• The national household saving ratio continues rising as Australians rebuild financial buffers amid economic uncertainty. Labour market strength—with unemployment at 5.3% as of March 2026—continues supporting wage growth and household incomes.
• This combination of elevated savings and employment resilience should underpin stable consumption, though heightened caution may constrain spending growth.