Retail set for recovery in second half of the year: JLL

Retail set for recovery in second half of the year: JLL
Katherine JimenezDecember 7, 2020

The groundwork is being set for a recovery in the retail market in second half of the year, with rents holding steady in the March quarter.

New figures released by JLL showed that retail rents stabilised for the second quarter in a row, having declined by 0.4% over the prior 12 months.

JLL’s head of retail, property and asset management, Tony Doherty, said: “JLL Research figures for March show market rents were stable across the main shopping centre categories for the second consecutive quarter despite the recent acceleration in retail turnover growth."

Data from the Australian Bureau Statistics showed that retail turnover growth accelerated from 3% last September to 4.9% in February. That uplift in spending, Mr Doherty pointed out was consistent with what it was seeing across the JLL-managed shopping centre portfolio.

JLL’s national retail analyst, Andrew Quillfeldt added that the acceleration in retail sales growth had now been underway for the past six months and "this will flow through to leasing demand after the usual time lag".

“Containing costs and managing the effects of discounting remain key challenges for many retailers, so we expect there to be limited rental growth in 2014, but the outlook beyond 2014 is becoming increasingly positive for the retail sector," he said.

A range of drivers such as retail turnover growth, household wealth and employment conditions, he said suggested leasing demand for retail space would gradually improve this year and "we are positive about the outlook for market conditions".

The report also highlighted that landlords and retailers are building for a recovery.

Specifically, it notes that total volume of projects under construction has been gradually increasing since 2009. Based on JLL's numbers, there were 881,000 square metres of retail floor space under construction as at Q1/2014.

In terms of the composition of the development pipeline of projects currently under construction, Mr Doherty said, the expansion of regional centres remained the largest share (32%). Neighbourhood centres accounted for 19% and bulky goods category killer centres 25%.

A further 175,000 square metres began construction in Q1/2014.

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Retail

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