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News release


Improved economic outlook to support retail growth

JLL Retail Survey shows market conditions are still challenging but positive signs are emerging in time for Christmas

​AUSTRALIA, WEDNESDAY 4 DECEMBER 2013 – The latest Survey of Retail Centre Managers conducted nationally by Jones Lang LaSalle has found that positive signs are finally emerging. 

There is an expectation that the market has turned just in time for Christmas. A more positive economic outlook in 2014 is expected to support improved retail trading conditions and the clear decision from the federal election has to a small degree improved sentiment.

The Retail Centre Managers’ Survey was undertaken in November 2013 across Jones Lang LaSalle’s managed portfolio. A total of 116 centres participated across the five mainland states and the ACT. 

Australian Head of Property and Asset Management, Richard Fennell said, “Tenant enquiry levels are still constrained, with more centre managers reporting weaker enquiry levels than improved enquiry levels over the September quarter. On balance, centre managers are now slightly positive about the economic outlook and its impact on retail trade, with a net balance of 4%.  This is a significant turnaround from the August survey, when the net balance was -38%.

“The market for food and convenience goods retailers is still reasonably buoyant. Busy lifestyles continue to support coffee shops, cafes, and take-away food. A wide range of services continue to show interest and are being actively targeted by leasing executives. Mobile phone outlets, hair and beauty, massage therapists, optometrists and travel agents continue to be an area of growth for centres,” said Mr Fennell.

Retail Turnover by Category.jpg
Retail Turnover: by Category
(% p.a. growth, year-on-year)

There was a slight improvement in customer traffic reported at Jones Lang LaSalle’s managed centres nationally and average spend per customer also improved. Sub-regional centres reported average annual growth in the year to September 2013 of 2.9% per customer visit.

Mr Fennell said, “This is a good result in light of the challenges faced by centre managers over the past 12 months.  The presence of strong anchor tenants and actively managing and improving the tenant mix has been paramount in generating sales growth.”

Competition from centres was highlighted as a concern amongst centre managers. 

Jones Lang LaSalle’s monitoring of new supply confirms that neighbourhood centre development is forecast to reach historically high levels in 2013. Sub-regional centre activity is also at its highest level in five years.

Director, Research and Consulting Australia, David Snoswell said, “Following the completion of ‘pre-GFC’ neighbourhood centre projects in 2007 and 2008, new supply was relatively weak and below long-term averages.  However, driven by strong competition for market share between Coles, Woolworths and more recently ALDI, neighbourhood centre supply is forecast to reach 170,000 square metres in 2013.

“There is already 77,000 sqm of projects under construction and due for completion in 2014 as well as other projects proposed or approved that may also enter the market,” said Mr Snoswell.

Neighbourhood and Sub-regional Centre Supply

Neighbourhood and Sub-regional Centre Supply.jpg
Note: New additions to neighbourhood and sub-regional centres across monitored metropolitan markets, including Sydney, Melbourne, SE Queensland, Perth, Adelaide and Canberra

The Survey found that pop-up retailers are more prevalent, adding activity and interest to what would otherwise be vacant space within a centre.

Mr Snoswell said consumer sentiment, as measured by the Westpac-Melbourne Institute Index of Consumer Sentiment, has continued to improve – reaching 110 points in November – the highest level in almost three years.

“The general theme coming through our quarterly surveys is that the retail market remains challenging and the ‘positive’ signs being reported are muted rather than providing a clear sign of a strong turnaround in demand for retail space.

“The table below illustrates the net balance in tenant enquiry for each of the surveys undertaken by Jones Lang LaSalle since September 2011.  Net balance still remains below the neutral 0% market,” said Mr Snoswell.

Tenant Enquiry: Net Balance, Sep-11 to Jun-13

Tenant Enquiry_Net Balance, Sep-11 to Jun-13.jpg

As with previous surveys, WA-based centres continue to outperform the market, with Perth’s suburban centres benefiting from the first full year of Sunday trading. 

​About the Retail Centre Managers’ Survey:
This Survey is the ninth quarterly Retail Centre Managers’ Survey conducted by Jones Lang LaSalle. The survey was undertaken in November 2013 across Jones Lang LaSalle’s managed portfolio and provides results of the retail market as at the end of September 2013 together with the views of centre managers on the 12 months ahead. A total of 116 centres participated in the survey across the five mainland states and the ACT.