South Australia’s Rundle Mall attracts global retailersSeptember 2, 2022 / By
Amid an economic downturn, the influx of globally recognised retail organisations secured space in Adelaide CBD’s major shopping strip along Rundle Mall. The vacancy rate for Rundle Mall fronting retail tenancies was 6.25% in 4Q19. Then COVID-19 hit, and the vacancy rate increased to 8.3% in 2Q20, further accelerating to 10.8% in 4Q20. Consequently, a wave of national and global retailers got an opportunity to secure space along the strip.
Figure 1: Rundle Mall Vacancy
Source: JLL Research, 2Q22
Anecdotally, the extended lockdowns in Australia’s two most populous states, Melbourne and Sydney, compelled retailers to look beyond the eastern seaboard for expansion-derived income and new store locations. South Australia underwent lockdown restrictions only for 11 days, compared to Melbourne and Sydney, which faced 262 and 198 days of lockdown, respectively. Therefore, South Australia’s economy experienced a reduced downturn and an earlier economic rebound. Even the reduction of daytime workers from Adelaide CBD, diminishing foot traffic around retail assets, was significantly shorter than in other states. Consequently, Rundle Mall proved highly desirable to retailers looking to maintain income levels during the pandemic.
Over the six months in 2022, 11 flagship stores have been either leased or committed, reducing vacancy to 6.9%. Over the most recent quarter, Uniqlo, JD Sports and Levi’s underwent fit-outs, homewares retailer Bed Bath N’ Table opened a new store within the Myer Centre, and national bookseller Dymocks opened its new store in Rundle Mall’s Regent Theatre. Additionally, during the second half of 2021, Glue Store, Vans, Supre, Industrie, Rebel Sport and Foot Locker opened their stores.
As of June 2022, retail trade increased by 4.8% in South Australia annually. Over the same period, rolling annual retail trade in clothing, footwear, and personal accessories, the predominant retail categories along Rundle Mall, reached 6.2%. Further spending in discretionary categories will likely be compounded by wage increases and a strong labour market. Over the June quarter, the Australian wage price index increased 0.7%, bringing annual wage growth to 2.6% – the highest annual rate recording since September 2014. Furthermore, South Australia’s unemployment rate decreased to 4.0% in June 2022, reaching the second lowest in SA ever.
Figure 2: South Australia fashion turnover vs total turnover
Source: JLL Research 2Q22
While headwinds like decades-high annual inflation (6.1% as of June 2022) are expected to curtail consumer purchasing power over the short term, inflation will likely be transitory, normalising over the next 24 months. With the tight labour market conditions and the expectation that interstate and international migration into SA will surpass pre-COVID levels, we expect more opportunistic tenants will look to secure space at Rundle Mall in the short term. The question is, will there even be space to accommodate them?
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