Retail Market in 2013

In the retail sector, occupiers are likely to continue to face tough trading conditions in 2013. Historically high household saving levels, the high Australian dollar, the continued evolution of online retailing and the push back of retailers against occupancy costs are just some of these challenges.

Increased competition from online sales and the influx of international retailers to Australia emerged last year and the trend is anticipated to continue apace this year. The charge is being led by charge is being led by US brands, but retailers from Europe, and increasingly Asia, are looking to expand into Australia. International retailers have been lured to Australia by the country’s comparative economic stability and consumers’ high disposable incomes. Shopping centre landlords in turn expect that having global brands in their centres will boost sales and leasing demand through the entire mall.

Despite the subdued consumer environment, Melbourne’s CBD retail market vacancy remains below long term averages, however rental growth is anticipated to be minimal in the short term. In contrast, Melbourne’s renowned retail strips have recorded significant rises in vacancy levels in 2012, particularly impacted by the softness in discretionary spending. Occupancy costs in shopping centres will continue to be under pressure, with neighbourhood centres, established on food-based retailing, best placed to offset the challenging discretionary spending conditions.

Victorian Retail Trade 2002-2012

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