PERTH RETAIL STRIPS - SEPTEMBER 2022

The Perth retail strip market has enjoyed improvement in overall occupancy of the five strips we survey. It has been an interesting time for the WA economy, trending well during the pandemic with strong GSP results propping up the national economy, stringent border controls resulting in limited disruption to trade compared to the East Coast. Improvements in employment and low interest rates all fuelling 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 given the growth in the housing market.

These indicators did not go unnoticed by investors, 2021 being the most active investment period for commercial property on record. WA was no exception as more interstate buyers speculated into commercial investments during a time of robust economic conditions. With interest rate rises this saw some moderation this year, local private investors and owner occupiers now dominating the investment landscape albeit the volume of transactions is now considerably down. Despite the rising 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 to average in the 4% to 6% range.

Its 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. Rising inflation continues to be a concern for consumers which has filtered into the retail market, the longevity of interest rate movements and inflationary pressures being key indicators of continued success of our retail strips over the next 12 months.