While retail vacancy remained fairly stable, the overall retail property condition continues to struggle, according to the National Australia Bank’s (NAB) commercial property index for the first quarter of 2012.
The Index retreated to -8 points for the period compared to -6 points in the fourth quarter of 2011, which was driven by negative capital value expectations in all sub-sectors.
In these results, retail was the least optimistic with expectations revised down to -1.4 per cent over next year and -0.4 per cent in the next two years.
Similarly, while gross rents were lower for office at 0.4 per cent, retail was much weaker with rents down -1.7 per cent in the next year and -0.8 per cent in two years.
According to NAB, the retail property market is currently over-supplied but excess to be worked out of market over three to five years.
The index also recorded that vacancy broadly remained unchanged for retail at 5.2 per cent but vacancy is expected to decline in all markets over the next two years as supply tightens and market conditions improve.
However, the report said consumer confidence is still seen as the biggest challenge for property firms over next year.