Sydney to welcome 33,300sqm of new retail space by year-end

Four of the six projects to be completed are neighbourhood centres.

According to a JLL report on Sydney’s overall retail property market, stage 2 of the Eastern Creek Quarter development and Quay Quarter reached completion in 2Q22, adding 19,000 sqm of new retail space into the market.

The report added that the supply pipeline in the near-term is low, with six projects currently under construction and expected to be complete by the end of 2022, delivering 33,300 sqm of retail space. Four out of the six new projects are neighbourhood centres, one is in the CBD and one is a refurbishment/extension to a regional centre.

Here’s more from JLL:

The rental declines recorded for the majority of subsectors throughout the pandemic have continued to stabilise in 2Q22 with the exception of CBD rents. Steep rental declines are still being recorded in CBD retail despite Sydney recording significant increases in foot traffic and higher office occupancy in 2Q22.

Following significant compression throughout 2021, yields remained steady across all subsectors for a second consecutive quarter.

Outlook: Costs to affect businesses and development feasibility

Cost pressures for businesses (minimum wage increase, higher input prices for manufacturing and supply chain congestion) are weighing on retailer profitability, which will consequently slow leasing demand and dampen rental increases over the short-to-medium term.

Supply chain congestion and labour shortages are likely to extend the build time for developments over the short-to-medium term, with many projects likely to be scaled back for feasibility purposes.