Wollongong consumers are likely to tighten their purse strings in 2019 - ultimately leading to store closures, a new report says.
Property valuation and advisory company Herron Todd White has released its latest report, aiming to identify the latest movements and trends for property markets across Australia.
The report includes Scott Russell, their commercial director for South East NSW, looking at Wollongong’s commercial property sector, with a focus on expectations for the retail sector in 2019.
Mr Russell wrote that in Wollongong, their “crystal ball is telling us that the strip retail market will continue to be the weakest of the main commercial asset classes in 2019”, as the industry continues to feel the effects of changing conditions surrounding online retailing and consumer spending habits.
“Additionally, with negative headlines surrounding declining house prices, there is a good chance that consumers will tighten their purse strings, further impacting retailers, particularly those reliant on discretionary spending,” he said.
“Ultimately, this will lead to store closures.”
Mr Russell said that while strip retailing in Wollongong will continue to experience soft conditions, he felt that strong demand will remain in the bulky goods space, “although the yield cycle has almost certainly reached its low point”.
“A long-term strategy, strong lease covenants and identifying value add opportunities will be key for investors in 2019,” he said.
Mr Russell also said he believed that the Wollongong market will continue to evolve, and retailers will do their best to adapt to their trading environment.
“The rejuvenation of the Wollongong CBD will advance as the city’s population base grows and we will see more of the traditional retailers being replaced by those in the food and beverage sector,” he said.
“Rents will remain flat and smaller shop fronts in the range of 50 to 100 square metres will be in most demand.
“Incentives required to lease vacant space and extended letting up periods will remain common in some locations.”
The report notes overall that Australia’s retail property sector has had a “fairly bumpy ride” in recent years, and that “it seems to be the case that existing businesses must adapt to survive”.