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News release


JLL 4Q 2014 Research: Retail leasing markets are gradually improving

Vacancy rates trended down in second half of 2014

​AUSTRALIA, 2 FEBRUARY 2015 – December quarter figures released by JLL show retail vacancy rates have continued to trend down.

Average specialty store vacancy rates fell across all retail categories and states in the second half of 2014. The six-monthly survey showed the national average fell to 3.2% in December from 3.6% in June 2014, and from a high of 4.0% in June 2013.

JLL’s Australian Head of Retail, Property & Asset Management, Tony Doherty said, “We’re seeing a gradual decline in retail vacancy rates across the country.

“The results indicate a slow and gradual return to the long-term average for vacancy rates. Although the reduction is a positive reflection of market conditions and correlates with a pick-up in retail sales through 2014, we continue to highlight that leasing conditions remain somewhat challenging to secure new tenants.” 

State vacancy rates from JLL’s 4Q 2014 National Retail Research figures:

The Sydney retail vacancy rate edged further lower to 2.2% in December from 2.4% in June 2014, but it remains the tightest retail market nationally. 
Melbourne showed no change in the vacancy rate, stable at 2.5%. 
Queensland and Perth recorded modest declines to 3.9% and 4.0% respectively. 
The Adelaide vacancy rate fell to 4.6% from 6.3% driven by a decline in the CBD vacancy rate and to a lesser extent, in the neighbourhood and sub-regional categories. 

“The biggest driver of the reduction in vacancy was in the CBD’s, particularly in Adelaide and Perth which are falling from a high level. Sydney recorded a decline in the CBD vacancy rate to 3.1% from 3.6%, and remains the lowest in the country,” said Mr Doherty.

“There are a few reasons for the improved tenant demand in the Sydney CBD. Sydney has benefitted from a solid rebound in retail spending growth through 2014, inbound tourism has picked up significantly (7.1% in the 12 months to Sept-14) and the inflow of international retailers is not only supporting the super-prime CBD locations, but also displacing a number of existing tenants to other locations around the CBD.”

Nationally, the average for regional centres fell from 1.4% to 1.1%, sub-regional centres fell from 2.6% to 2.4% and neighbourhood centres fell from 4.2% to 3.9%.

Mr Doherty said, “It’s also important to note that some centres have deliberately been holding vacancy in preparation for refurbishment or redevelopment works.

“Landlords are continuing to progress with development pipelines, particularly refurbishments and expansion projects. New shopping centre developments remain limited, except in the case of the neighbourhood sector.”

A total of 750,000 square metres of retail space commenced construction in 2014. Single tenanted bulky goods centres accounted for the largest share (36%) comprising a mix of Bunnings Warehouses, Masters Home Improvement stores and two IKEA stores. Sub-regional and neighbourhood centres made up approximately 20% and 17% of the commencements respectively, followed by regional centres at 14%. 

Figure 1 Retail Vacancy Rates by Category.jpg