APPD Market Report Article
Sydney
February 22, 2024Andrew Quillfeldt, Head of Capital Markets Research, Australia
-0.1%
AUD 1,715
Rents
Stable
Rents remain stable across all sub-sectors
- While annual retail trade growth continues to trend downwards in New South Wales (3.7% y-o-y), Black Friday has driven positive monthly retail trade growth for November 2023 (1.6% m-o-m, up from -0.7% in October 2023).
- Leasing activity remains weak across most categories and sub-sectors, but enquiries for CBD retail spaces have increased.
Supply concentrated in the neighbourhood sub-sector
- Two new neighbourhood centres reached completion, adding 21,800 sqm of new retail space in the quarter.
- Annual supply additions in 2023 totalled only 47,900 sqm, 45% less than the ten-year annual average of 86,600 sqm.
Regional and sub-regional yields remain stable
- Neighbourhood, LFR and CBD mid-point yields softened to between 12 and 38 bps over the quarter.
- Transaction volumes totalled AUD 1,144.5 million in 2023, a 45% decrease from 2022.
Outlook: Households to keep pulling back on discretionary spending
- As cost of living remains elevated, households are likely to continue pulling back on discretionary spending in the near term.
- Supply additions in 2024 are expected to total 133,400 sqm, broadly in line with the ten-year average. However, construction costs remain a headwind to the supply pipeline.
