Australian retail market remains strong

The Australian retail market remains strong, particularly in large format retail and neighborhood assets, according to Colliers International.

Strong population growth has led to increased density within cities, particularly in Sydney and Melbourne. The increase in density has resulted in some developers looking at developments that have a combination of residential, retail and office to maximize site value. This has resulted in a stronger development pipeline over the next two years, with many developers focusing on the growth states of Victoria and New South Wales.

The retail sector has underperformed compared to other sectors, with this sector having the weakest result, but it remained in positive territory. Most of the listed retail sector has reported improved retail sales across all categories in the first quarter, although department store sales growth was still negative, but the decline in this category slowed.

Online retail has continued to grow in importance in the Australian market; however, it has not reached the same level of penetration that is being felt in some other markets, including the United States and United Kingdom. The data suggests that the online sector is being driven by multi-channel retailers, which integrate their online and in-store experience. This is where there is continued growth, with retailers integrating their store network and their online businesses so customers can interact across both channels.

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