Retail spending in NSW grew by 4.78% in the 12 months to May, up from 2.88% growth the previous year.
Knight Frank’s NSW Retail Market Overview, July 2007, says this represents a strong increase on the previous year’s growth, but that it continues to lag behind the Australian total five-year average of 5.93%.
Despite sluggish growth in the state economy and in retail spending, the NSW retail sector managed a healthy total return of 17.27% for the year to March 2007, supported by low vacancy rates underpinning steady rental growth.
This led to a pick-up in retail spending and yield compression on the back of strong investor demand across all retail asset classes.
Rental growth was experienced across all retail asset classes in the 12 months to July.
Knight Frank reported that sub-regional centres experienced the strongest growth with net rents increasing 4.2%. Bulky goods centres faired the worst, with rents increasing just 1.8% over the period.
According to Knight Frank, a total of 302,000 square metres of new retail space is due to enter the market in 2007, before surging in 2008 when a further 593,000sqm is due for completion.
The NSW retail market comprises about 6.8 million square metres of retail space across 497 centres.
The Sydney metropolitan area accommodates 64% of the state’s retail space, with the remaining 36% located in regional NSW.