PERTH RETAIL STRIPS - DECEMBER 2023

The Perth retail strip market has enjoyed improvement in overall occupancy over the five strips we have surveyed in the past five years. We have added a further three retail strips to this edition.

Throughout 2023, the Western Australian economy experienced a blend of challenges and opportunities, significantly impacting the retail industry and subsequently influencing the retail property market. The sector faced a dynamic landscape shaped by factors such as shifting consumer behaviours, and the aftermath of the COVID-19 pandemic. Improvements in employment fuelled strong increases in the residential market after a prolonged period of treading water for some Perth markets. Growth in residential sales volumes, increased confidence all driving retail trade particularly in the food and homeware sectors.

WA had an increase in interstate buyers purchasing commercial investments during a time of robust economic conditions. With interest rate rises moderating, local private investors and owner occupiers now dominate the investment landscape albeit the volume of transactions is currently subdued. Despite the increased cost of funding, savvy buyers are still capitalising on opportunities across retail, particularly in these strips which have a proven track record of high occupancy. While there has been some change in yield expectation over the last 6-12 months sales average in the 5% to 6% range.

It’s still an interesting time for retail in this environment, while online sales have grown in recent times notably in response to COVID-19 many of our strips buck the trend and still perform well in the digital environment. Inflation figures as well as the projected cash rate decreases will be key indicators impacting the success of our retail strips over the next 12 months.