Retail property market cools over Q3
The firm’s Australian Retail Investments Spring 2018 report found that NSW topped investment volume for the quarter, recording 69 per cent of total investment, or $1.5 billion.
Queensland investment volume ranked second, contributing $431 million, while Victoria ranked third at $98 million, significantly below the $1.6 billion it recorded in the second quarter.
“The retail sector continues to adjust to major changes as demanded by consumer preferences,” the report reads.
“This quarter, significant amendments were made to the land use definitions… supporting both retailers and landlords alike. A new definition, ‘Specialised Retail Premises’ was introduced…allowing landlords to reposition their tenant mix to meet consumer preferences for a one-stop retail experience.”
Larger format supermarkets such as Woolworths and Coles have taken note of the trend toward smaller format stores, particularly in high density metro locations where customers tend to shop more often, and with smaller basket sizes, according to the report.
Cushman & Wakefield is forecasting annual investment volume to reach $7.5 billion to $8 billion, a 15 to 20 per cent reduction compared to 2017.
This forecast is backed up by the NAB Commercial Property Survey Q3 2018, which noted that sentiment had remained flat or fallen across all sectors, with retail sentiment in particular diving further into negative territory.
Retail sentiment is forecasted to fall further over the next 12 months, according to NAB, which posits that it could fall as low as 37 points below the base line, currently sitting at -20.
“Clearly, a subdued outlook for retail trade is playing a role, with NAB also expecting the retail trade sector to remain under pressure from weak wages, cost of living concerns and wealth impacts from a cooling housing market,” NAB’s report explains.
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