APPD Market Report Article

SE Queensland

September 4, 2023

Andrew Quillfeldt, Head of Capital Markets Research, Australia

0.1%

AUD 1,481

Rents
Stable

Neighbourhood and CBD sub-sectors record q-o-q rental declines

  • Excluding department stores which remained stable from the previous quarter, all other retail categories recorded declines in consumer spending. Total retail trade is down 1.5% from the previous quarter.
  • Leases are taking extended periods of up to six months to sign as space demand softens. Nevertheless, rents for super prime CBD space have not declined. In the CBD, luxury retail brands have been expanding their physical footprint. 

All sub-sectors record bi-annual decline in vacancy rates

  • One neighbourhood centre, South City Square, totalling in excess of 4,500 sqm, reached completion in the quarter. 
  • Construction activity is forecast to remain subdued over the latter half of the year. Only five new projects totalling 72,660 sqm are forecast for completion by the end of 2023.

LFR midpoint yield holds steady

  • Rents for the CBD recorded a q-o-q decline of 2.50%, the sub-sector’s largest quarterly movement since the first quarter of 2022. The neighbourhood sub-sector was the only other sub-sector to record a significant q-o-q movement, declining by 1.25%. 
  • Yields softened across all sub-sectors except for the Large Format Retail (LFR) midpoint yield which held steady over the quarter.

Outlook: New retail project completions expected in the next quarter

  • Additional yield softening is forecast for regional, sub-regional and neighbourhood sub-sectors until the end of 2023.
  • Although construction delays have somewhat eased, minimal retail project completions are forecast for the remainder of 2023.  

Note: SE Queensland Retail refers to South East Queensland's overall retail market.

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