APPD Market Report Article


February 22, 2024

Andrew Quillfeldt, Head of Capital Markets Research, Australia


AUD 1,505


Rents remain stable across all sub-sectors

  • Monthly retail trade growth for November 2023 was recorded at 2.4% (up from -1.1% in October 2023). The strongest growth was recorded in clothing (6.3%) and department store (5.8%) spending as consumers took advantage of Black Friday sales. 
  • Although the pace of finalising leasing deals remains slow, operatives have anecdotally stated that leasing demand from franchises has improved and mini-majors remain opportunistic. 

Five projects totalling 22,600 sqm reach completion

  • Supply additions totalled 22,600 sqm across five projects over the quarter, a slight uptick from previous quarters. 
  • Only 41,000 sqm of new retail space was added to the market in 2023, 60% less than the ten-year annual completion average.  

Yields remain stable across all sub-sectors

  • Over the quarter, yields remained stable across all sub-sectors. However, yields across all sub-sectors softened between 6 and 37 bps annually. 
  • Transaction volumes totalled AUD 1,708.3 million in 2023, a 62% increase from 2022.

Outlook: Construction costs to remain a headwind to the supply pipeline

  • Construction activity is expected to remain subdued over the short to medium term due to high construction costs.
  • Households are likely to continue pulling back on discretionary spending given ongoing cost-of-living pressures.

Note: Melbourne Retail refers to Melbourne's overall retail market.

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