PropTrack Retail Snapshot 2021

Uncertainty remains an issue for those looking to lease a retail space.  Picture:
Uncertainty remains an issue for those looking to lease a retail space. Picture:


  • Buyer demand has recovered over the past 12 months, with sales volumes returning to the highest levels seen since 2015.
  • Leasing demand is seeing a less rapid recovery, as retailers face ongoing challenges and uncertainties due to the pandemic.
  • Retail investors are increasingly looking for assets tenanted by ‘pandemic proof’ businesses with a lower risk of vacancy.
  • The proportion of businesses looking to occupy space in Australia’s CBDs has declined, highlighting the ongoing difficulties faced by retailers in these markets.

How are search volumes tracking?

Searches to buy retail assets have strengthened over 2021, peaking in October before declining in line with the seasonal impact typically seen towards the end of the year.

In contrast, after peaking in March, the number of searches to lease retail property have trended downwards throughout the year, ending below 2020 levels.

The growing spread between buy and lease searches is unsurprising. In contrast to investors who tend to take a longer-term view when buying an asset, tenants are more focused on the near term which, in the presence of COVID-19, is presenting significant uncertainty.

A combination of factors, including lockdowns, social distancing requirements, and remote working have created challenging conditions for many retailers. It is likely that many retailers will continue to hold off leasing decisions until they have more certainty.

Sales have bounced back

Following the onset of the pandemic in 2020, retail sales volumes collapsed to the lowest level seen in over a decade. The past 12 months, however, have seen a significant bounce back, with volumes recovering to the highest level seen since 2015.

Contributing to this result was the largest direct retail transaction ever recorded in Australia – the acquisition of a 25% share in Sydney’s Macquarie Centre and a 20% share in the Gold Coast’s Pacific Fair by AMP from Dexus for a combined $758.9 million.

Where are investors looking to buy?

Among those looking to buy retail properties in New South Wales, Sydney is the most sought after destination, accounting for 4.7% of all searches in 2021, up from 3.3% in 2020.

While this rise in demand is surprising given the challenges faced by the CBD due to COVID-19, some investors may see opportunity in the weaker pricing conditions.

In contrast, investors are displaying a heightened level of caution in Melbourne. While remaining the most searched for Victorian location among those looking to lease retail, Melbourne’s share of searches has fallen from 4.8% to 3.4% over the past 12 months.

Similar declines were seen in other capital cities over the past 12 months, including Adelaide (18.8% to 17.8%), Perth (6.6% to 3.8%), and Hobart (8.2% to 5.1%).

Where are businesses looking to lease?

Retailers located in Australia’s CBDs have been among the hardest hit by the pandemic. Lower office occupancy rates and fewer residents have driven a sharp reduction in foot traffic in cities.

This has led to decreased demand for CBD retail space among those looking to lease.

In 2020, the Sydney CBD was the most searched for location in New South Wales among those looking to lease retail space, accounting for 3.7% of all searches. It has since slipped into third place behind Surry Hills and Alexandria, now accounting for just 3% of searches.

Buyers are looking for retail spaces with a tenant already in place. Picture:

A similar trend has been observed in Victoria, where the proportion of retail lease searches in the Melbourne CBD fell from 5.7% in 2020 to 5% in 2021. Richmond is now the most searched for suburb among those looking to lease retail, rising from 3.7% of searches in 2020 to 5.2% in 2021.

In Queensland, Fortitude Valley remained the most in demand suburb by retail tenants, accounting for 6% of all searches (up from 4.6% 12 months ago). Brisbane City followed, though has seen it’s share decline from 3.1% in 2020 to 2.7% in 2021.

Floor space requirements

Among both investors and tenants, retail properties in the 200-500 sqm range were the most in demand, accounting for 37.9% of buy searches and 43.5% of lease searches respectively.

In general, those looking to buy retail properties are looking for more space than those looking to lease. 26.2% of searches to buy retail were for properties with at least 500 sqm of space compared to 19.6% of lease searches.

What are investors looking for in the retail sites they buy?

In a sign that retail investors have become more cautious throughout the pandemic, they are increasingly searching to buy assets with tenants already in place. As a result, searches for ‘tenanted investment’ have jumped by 98% over the past 12 months to become the most searched for key phrase. What’s more, searches for ‘high yield’ have jumped up an astonishing 1,010% over the same time.

Assets with pandemic and recession proof tenants in place are increasingly in demand, with searches for ‘medical’ up 548%, ‘service station’ up 421%, and ‘storage’ up 168%.

What are businesses looking for in the retail site they lease?

Among those looking to lease retail property, ‘kitchen’ was the most searched keyword, followed by ‘restaurant/food’.

Keywords that have recorded a notable rise over the last 12 months include ‘bar/alcohol’ (up 93%), ‘beauty salon’ (up 101%), and ‘childcare’ (up 101%).

In contrast, significant declines were seen for ‘grease trap’ (down 60%) and ‘store front’ (down 28%).