H1 2026 vacancy shows mixed results

• Regional vacancy remained stable in H1 2026, but increased in my a minor amount across sub-regional and neighbourhood centres, while CBD and large format retail vacanct rates trended downwards.
• Household spending in NSW increased by 4.5% y-o-y to May 2026. Seasonally adjusted, spending increased across most categories, except transport (-1.4%) and recreation and culture (-0.1%), due to rising fuel costs and prioritization of non-discretionary spending.

No new supply was added in Q2 2026

• One completion was recorded in Sydney, the refurbishment of HomeCo Caringbah, which added no additional stock to the market.
• 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 sub-regional centres (30,000 sqm).

Rents increased across all sub-sectors; yields remain stable

• Gross rents increased across all subsectors during the quarter, ranging from 0.50% to 7.43%. Once again, large format retail recorded the highest growth at 7.4%, reaching AUD 330 per sqm p.a. Yields remained stable across all sub-sectors.
• NSW achieved the highest overall sales volumes nationally at AUD 1.0 billion in Q2 2026 and AUD 1.6 billion year-to-date. The largest transaction recorded in Q2 2026 was Macarthur Square (AUD 568. million), which sold as part of the APPF – GPT Super Regional portfolio.

Outlook: Supply chain pressures likely to continue in the near term

• Retail supply chains could be vulnerable to elevated freight, logistics, and energy costs amid ongoing global uncertainty, which could result in some delayed goods coming into the country. This is not expected to be a widespread concern.
• Driven by population growth and new residential developments, large format retail is expected to continue to perform amidst continued tenant demand and low vacancy rates across the sub-sector.