Despite growing retail trade, leasing demand remains low

• Victoria’s year-on-year retail trade growth in December 2024 was recorded at 2.4%, in line with the national average.
• Demand in Melbourne was subdued over the quarter with lower levels of leasing enquiries reported.

Annual completions for 2024 totalled 68,900 sqm

• Two new projects, two extensions and one refurbishment project totalling around 26,800 sqm were completed in Q4 2024.
• Quarterly completions fell to 1% below the 10-year historical average (26,982 sqm), having exceeded the historical average by 38% last quarter. Annual completions for 2024 totalled 68,900 sqm, an increase from 2023 of 40,956.

No yield movements were recorded in the quarter

• All sub-sector yields were stable compared to the previous quarter and on a 12-month basis.
• The sub-regional sub-sector (6.50%) remained the highest-yielding sub-sector in Victoria.

Outlook: Potential rate cuts are likely to drive transaction liquidity in 2025

• Regional and sub-regional yields are expected to remain stable while neighbourhood yields are forecast to tighten over the next 12 months.
• The cash rate futures market continues to forecast rate cuts by the RBA in H1 2025, potentially driving transaction liquidity in Victoria in the near-term and medium-term.