APPD Market Report Article
Melbourne
August 23, 2024LFR rents record a 2% quarter-on-quarter increase
- Rolling annual retail trade growth to May 2024 was recorded at 1.2%, below the national average of 1.6%.
- Construction and fit-out costs delayed store openings.
CBD vacancy rate decreased 2.0 ppts to 4.7% in JLL’s H1 2024 vacancy survey
- In the past six months, the CBD vacancy rate has declined while all other sub-sector vacancy rates have increased.
- Annual retail completions (68,390 sqm) in 2024 are expected to fall below the ten-year historical average of 83,000 sqm.
Retail yields are likely at the end of the decompression cycle
- On an annual basis, the regional and LFR sub-sectors recorded yield decompressions of 12 bps and 13 bps, respectively, while all other sub-sectors were stable.
- Quarterly transactions totalled AUD 85.9 million, 19% below the ten-year historical average of AUD 450.8 million.
Outlook: Retail completions to remain low
- Although consumers pulling back from discretionary spending may lead to a rise in vacancy rates in the near term, shortage of new supply is expected to drive rental growth in the retail sector.
- Regional shopping centre rent growth is expected to outperform sub-regional and neighbourhood centre rent growth by year-end.
