Property
Issue No. 42 - August/September 2008
Retail sector thriving under pressure
by Mr Kel Spencer
The Reserve Bank of Australia’s decision to leave interest rates at 7.25% was a welcome one here in South Australia and around the country.
The result of consecutive rate rises has been a fall in consumer and business confidence and it is feared any further rises will put a large strain on already struggling home and business owners.
This coupled with a strong Australian dollar and rising petrol prices are hurting SA retailers. Our exporters are also hoping there are no further rate rises, with our largest export partner, the USA, on the brink of a recession, a slowing global economy, and rising business costs already making it hard for them.
Having said this it is not all doom and gloom for SA’s retail sector.
Australian Retail Market
Conditions in the Australian CBD retail market are firm. This is supported by tightening vacancy rates and upward drive in rentals. With the exception of Melbourne, all CBD retail markets recorded a vacancy rate below their 10-year average.
This fall in vacancy rates around the country can be attributed to the increased demand by retailers for high-quality floorspace and at the same time there has only been nominal amounts of new supply coming onto
the market.
As a result vacancy rates in all CBD retail markets have been falling.
Throughout 2007 there were about 805,000 people employed in retail in Australian CBDs. This represents an increase of 22% since 2003 and rising stock levels in the various CBDs supports this growth.
Around the country, total space has increased by 1.1 million square metres during the same time period. This is equivalent to an increase of 9% of existing stock.
Adelaide Retail Market
In Adelaide, recent retail developments in the CBD include the City Cross project, 151 Pirie Street, and Currie Street Office Tower.
The City Cross project was completed back in 2005, which included 8000m2 of new and refu...
