Sydney to see nearly 40,000sqm of new retail space by year-end

This will be from four neighbourhood projects.

According to JLL, only one retail project, Leppington Village Shopping Centre totalling 8,000 sqm, reached completion in Sydney in the third quarter.

There are four neighbourhood projects expected to reach completion by year-end, and forecast to add 39,800 sqm of new retail space, well below the historical annual completions average.

Here’s more from JLL:

Retail growth shows signs of a well-flagged slowdown. Monthly retail spending was flat in August 2023 with declines in spendings on food (-0.1% m-o-m) and household goods (-1.7%).

Anecdotally, there has been a slight increase in leasing enquiries over the quarter, with the majority of enquiries concentrated in retail centres outside of the CBD.

Yield softening of 13 to 25 bps q-o-q across retail sub-sectors

Rents held flat for a consecutive quarter as inflationary pressures continued to affect business margins from some retailers.

Yield softening was recorded across all sub-sectors. The large-format retail (LFR) and sub-regional sub-sectors recorded the largest quarterly change (+25 bps), and remained the highest yielding retail sub-sectors.

Outlook: Limited supply additions to boost existing retail performance

Retail turnover is forecast to materially decline over the remainder of the year, given that a large tranche of fixed rate mortgages expire within this time, and households may cut back on discretionary spending.

Construction activity is expected to reach record lows in the short to medium term.

Note: Sydney Retail refers to Sydney's overall retail market.