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News release

Australia

JLL 2Q 2014 Research: Retail vacancy rates tracking lower

Retail Leasing market conditions begin to improve


​AUSTRALIA, 16 JULY 2014 – June quarter figures released by JLL show retail vacancy rates decreased in the first six months of 2014, as retail market conditions begin to improve.

The average retail vacancy rate for Australia decreased to 3.6% in June 2014 from 3.8% in December 2013, on average across all retail formats. CBD and sub-regional formats were the main drivers, with the sub-regional vacancy rate falling from 3.0% to 2.6% and CBD vacancy falling from 6.6% to 6.2%. Vacancy in Regional shopping centres fell marginally (-0.1% to 1.4%) and Neighbourhood Centres increased marginally (+0.1% to 4.2%).

JLL’s Australian Head of Retail, Property & Asset Management, Tony Doherty said, “The June figures are encouraging, particularly for Brisbane and Perth. As of December 2013, both markets had the highest rate of retail vacancy in the country, but conditions are now improving, predominantly the result of high CBD vacancy rates beginning to ease. This modest improvement in the first a half of 2014 now puts them ahead of Adelaide. 

“Melbourne also recorded a reduction in the average retail vacancy rate to 2.5% in June 2014 from 2.7% in December 2013, with the CBD being a major contributor to the decline. Unlike other markets where new supply was the major driver of rising vacancy rates, the opposite is occurring in Melbourne. 

“Domestic and international retailers are recognising that the Melbourne CBD is being revitalised and that the enhanced retail offer is attracting a lot of shoppers back to the CBD. The recent completion of a refurbishment at Melbourne’s GPO which introduced H&M to Australia, and development of Emporium Melbourne which introduced a range of new international brands to Australia, have both further lifted the profile of the CBD as a major shopping destination,” said Mr Doherty.

The Sydney retail vacancy rate edged slightly higher to 2.4% from 2.2%, but it remains the tightest retail market nationally. 

Mr Doherty said, “Overall, the mood in the leasing market is improving and conditions are easing following a challenging few years. Retailers and centre managers have been proactive in responding to the weaker retail trading conditions in recent years as well as changes in shopping habits, and these strategies are now starting to show a positive payoff.”

JLL’s National Retail Analyst, Andrew Quillfeldt said, “The decrease in retail vacancy rates was not dramatic, but the trend is consistent with the pick-up in retail sales since mid-2013.

“We still believe the recovery in the leasing market will be a gradual process, but the June 2014 vacancy survey results were a pointer to a more positive outlook.

“Although vacancy rates were slightly lower across the board, it did not yet translate into market rental growth. We recorded no change in rents in 2Q/2014 on average across all the retail formats. Rents have now been stable for three consecutive quarters after recording modest declines for two years between 3Q/2011 and 3Q/2013,” said Mr Quillfeldt.

Figure 1 below shows retail vacancy rates decreased in all categories except Neighbourhood Centres in 1H 14. 

Figure 1 Retail Vacancy Rates - By Format.jpg 
Source: JLL Research 


Figure 2 Retail Vacancy Rates - by market.jpg
Source: JLL Research 

Note to Editors: 

CBD vacancy rates include shopping centres and high street shops. References to national figures exclude Northern Territory and Tasmania. 

Classifications for shopping centre formats is below:

CBD: The main commercial centre of a metropolitan area. Retail forms found within the CBD include strip shops, enclosed arcades and very large shopping complexes.

Regional Centres: Major centres that are department store based (Myer/Grace Bros, David Jones or John Martins). These centres often contain more than 200 specialty shops and several other major tenants.

Sub-regional Centres: Centres that are discount department store based (eg K-Mart, Target, Big W and Harris Scarfe).

Neighbourhood Centres: Enclosed centres containing a supermarket and specialties.

Bulky Goods: The sale of low cost/high bulk goods, such as furniture, electrical goods and building products. May be freestanding, in enclosed centres or within retail warehousing parks.