Insights - Adelaide Retail Market

December, 2021 – Despite challenging economic conditions, Adelaide’s retail property market remains a strong performer coinciding with record trade where September of this year recorded a massive $2.045 billion in retail turnover.

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Adelaide’s Retail Sector Defies Pandemic Cloud

Despite challenging economic conditions, Adelaide’s retail property market remains a strong performer coinciding with record trade where September of this year recorded a massive $2.045 billion in retail turnover.

The South Australian retail sector continued to record high levels of investment demand throughout 2021.

There have been some key assets transact in Adelaide during 2021, including Rundle Place in the CBD for $210.2 million. Investor demand has also been exceptionally strong for Large Format Retail Centres, fuelled by private investors, unlisted funds, syndicates and REITs which has driven the compression of yields.

The most recent Large Format Retail transaction was the sale of Bunnings Munno Para for $48.8 million to Charter Hall reflecting a market yield of 4.22%

Yields for Large Format Retail assets in South Australia range between 5.50% and 6.75%, with freestanding stores occupied by ASX listed retailers such as Bunnings and Officeworks, transacting at yields significantly lower than the larger multi-tenant centres.

Tenant demand for South Australian large format space was largely driven by consumer demand for household goods which saw retail turnover increase circa 8.00% for the year ending September, 2021.

Yields for Adelaide’s ‘High Street’ precincts have remained firm with a reported range of 4.00% to 5.00%.

There has been increased tenant demand for ‘High Street’ locations over the past 18 months due to more people working from home. Net face rental growth for High Street was mixed and varies depending on the location, but they generally range between $500 and $1,000 per square metre.

Growth in the online retail sector and the continuing expansion of online marketplaces has resulted in retail centre owners changing their tenancy mix.

The pattern of rationalisation of fashion and growth of health and beauty, services, food-based retailing and entertainment has been a trend over the past five years. Following a volatile 24 months, with periods of panic buying as well as household’s inability to spend on usual leisure and recreational services, household spending is now expected to rebalance over the coming two years.

Authors

Nicholas Dreyer

Associate Director

View Profile > SA
Casey Robinson

National Research Specialist

View Profile > QLD

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