Martino Property Group

The threat from e-commerce ramped-up late in 2016 following Amazon’s announcement of its impending roll-out in Australia.

Over the next decade Perth’s retail sector landscape could look distinctly different than it does today. The race is now on to ‘Amazon-Proof’ existing centres’ connections with the local community, in order to defend market share.

To avoid being a casualty, major shopping centre owners have proposed an estimated $3.95 billion in expansions and improvements over the next five years; seeking to turn these centres into entertainment, leisure and tourism hubs.

Current market conditions

WA’s economic woes continued to cause sluggish retail conditions over the March 2017 quarter. Population growth slowed to 0.97% in September 2016. Consumer confidence remains supressed, as key contributors to this measure, such as unemployment, underemployment and income growth, remained soft.In line with this, Perth’s ‘Household Goods’ turnover during the March 2017 quarter fell 5.25 per cent year on year. Meanwhile, online retailing disruption and consumer

In line with this, Perth’s ‘Household Goods’ turnover during the March 2017 quarter fell 5.25% year on year. Meanwhile, online retailing disruption and consumer belt tightening are likely behind the 5.12% contraction in ‘Department Stores’ turnover. Sectors that grew over the year were ‘Café, Restaurants etc.’and ‘Food’. Together, these improvements underpinned a 0.46% total turnover growth.

Retail spend per capita declined 0.33% to $3,232 in September 2016. However, this was still 3.04 per cent higher than the national rate of $3,137 per person.

The lacklustre retail turnover results drove retail employment down 6.5% or 9,500 employees in the year to March 2017.

The demand for retail space in Perth remains subdued, impacting rental growth. CBD mall rents were averaging $3,665/sqm for space ranging between 50sqm and 100sqm at the end of March 2017. This is down from $3,845/sqm at the end of December 2016.

Neighbourhood centre rents also contracted. The rise in space available for lease over the past year has caused rents to fall to an average of $555/sqm.

Notwithstanding this, most major centres maintained strong occupancy levels. Major centre owners remain optimistic about Perth’s future, and are forging ahead with significant redevelopment and expansion plans.

In terms of future supply of shopping centre floor space in the Perth metropolitan area, 143,504sqm is scheduled for completion in 2017. From here, supply peaks in 2018 at 231,840sqm before falling steadily over the following years in 2019 (161,701sqm), 2020 (123,903sqm) and 2021 (19,400sqm).

 

Source: Colliers International Retail Research & Forecast Report – First Half 2017

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