SA retail turnover growth remains elevated

• South Australia’s (SA) retail turnover growth reached 8.7% y-o-y in November 2022, marking the highest annual growth rate recorded since June 2021. This was driven largely by increased spending in the take-home food category (8.7% y-o-y), as well as spending in the discretionary categories of clothing, footwear and accessories (12.1% y-o-y) and household goods (8.6% y-o-y).
• Despite positive retail trade growth, retailers are expected to be cautious with expansion plans, given rising interest rates. Over the quarter, vacancy rates increased for Adelaide’s regional centres while decreasing or remaining unchanged in the remaining sub-sectors.

Elevated stock delivery expected in 2023

• There were no completions across all sub-sectors over the quarter.
• There is 72,850 sqm of retail space currently under construction across 10 projects, 85% (61,850 sqm) of which is expected to complete in 2023. The largest project is a significant expansion of Burnside Village comprising new retail space, hospitality offerings and a 24-hour gym.

Yields are broadly stable

• Gross rents marginally increased across all sub-sectors, with the strongest growth recorded in the neighbourhood sub-sector (0.5% q-o-q and 1.1% y-o-y respectively).
• Yields were unchanged across all sub-sectors except the neighbourhood sub-sector, which softened 25 basis points (bps) as investor appetite for the tighter-yielding asset class decreased.

Outlook: Retail trade is likely to slow in uncertain market conditions

• Retail spending is likely to slow in 2023 as inflationary pressures and increasing interest rates impact household spending. This is likely to impact retailer demand for space in the next 12 months.
• Retail rental growth is forecast to remain relatively stable despite weaker consumer sentiment, given the improvement in retailer profitability in the last two years.