Retail properties should be an important part of all diversified property investment portfolios, particularly given retail sales has shown reliable growth every year for 3 decades.

According to ABS, Retail Sales in Australia increased 2.90% in February of 2019 over the same month in the previous year.  This is solid growth, particularly given Australia’s current economic environment. Australia’s Retail Sales growth has averaged 5.76% from 1983 until 2019 (36 years), reaching an all time high of 12.70% in October of 1985 and a record low of 1.90% in October of 2017. Although well off it’s high, this ever-increasing retail spending bodes well for the retail property sector in Australia.

Large format retail, previously referred to as big-box retail, has seen significant growth as a sub-sector of retail property. This is a direct result of the lower occupancy costs associated with this style of property attracting tenants away from traditional retail property formats and expanding the range of likely tenants. It is true that online sales have been experiencing strong growth (from a low base) but, according to Australia Post, they are forecast to only make up 10% of total retail sales by 2020, the other 90% is acquired from physical stores.