Adelaide retail market shown no growth for several years: HTW

Retail throughout metropolitan Adelaide has not shown any significant growth for several years, according to Herron Todd White’s latest report.

The property valuation firm says that retail trade figures published by Australian Bureau of Statistics (ABS) show retail turnover for South Australia have been at growth per quarter of below 1.5 percent since December 2014 2.4 percent growth, which was the highest quarter of growth since March 2008.

This is consistent with the national trend.

"This poor retail performance is not expected to change in the short term, with the low interest rate environment and rising house prices being offset by weak wage growth and continued softening in the labour market.

The sustainability of many businesses is challenged when retail trade continues to be this poor.

As a result, rent growth has stabilised, however in some sectors, reduced significantly. Vacancy is up and incentive use is increasing," the report stated.

Retail strip shopping has continued to show decline with cafés the best performing use.

In particular, rural retail tenancies are being negatively affected by contractions meaning that there is no demand for a commercial use.

"In some cases, within smaller towns, unless these shops can be converted to a residential use there is almost no demand.

Key locations such as The Parade Norwood, O’Connell Street North Adelaide and Jetty Road Glenelg, which are the premium suburban retail streets, remain at values out of reach to owner- occupiers, and with declining rentals they are less attractive to risk sensitive investors.

Even Rundle Mall, at the heart of the Adelaide CBD is experiencing vacancies," the report advised.

Shopping centre rents are also reported to be decreasing even within otherwise well performing centres.

This is resulting in numerous tenants being retained in ‘Holding Over’.

"Hold Over rents typically include penalty rates which may be considered better than a vacancy to the managers, this will take time to be absorbed," the report stated.