The retail property sector in Australia has suffered over the last few years. However, it is set to recover as a slight upturn in consumer spending leads to a modest degree of tightening the market.
This is also enhanced by sales and growing interest in foreign retailers in prime CBD locations. This is expected to rise from 1.5 percent in 2014 to 2.1 in 2015. Foreign fashion brands such as H&M, Forever 21, Uniqlo and Furla are essential to the retail economy as they drive competition for retail space and items.
The trends in how retail space is divided are also changing. Retail landlords are increasingly replacing internet exposed tradable goods tenants such as book stores and music retailers with growing service-based clients such as beauty clinics and personal care as well as food service outlets. However, online retailers are pummeling department stores.
State/Sector Key Developments
Markets are generally expected to tighten in New South Wales and Queensland amid strengthening economic conditions in Sydney, Brisbane, the Gold Coast and the Sunshine Coast.
Perhaps surprisingly, markets in Perth are expected to tighten further notwithstanding expectations of slowing population and economic growth there.
Generally subdued economic conditions will see markets weaken in Victoria, South Australia and the Northern Territory.
The best returns are expected in large format retail, while cafés and service outlets should do well. There is little sign of any upturn in department store trading conditions.