Logistics & Industrial Capital Markets 2024 Outlook Report

Consumer spending to slow further as households reign in their budget Although businesses have been resilient in the face of interest rate hikes, higher financing costs are taking their toll on households. The impact of higher interest rates can now be seen in the data – consumer sentiment remains around recessionary levels, and retail turnover has slowed remarkedly. More recently, this has led to a shift to non-discretionary retail categories, including food, which bodes well for the continued growth of the cold storage market in Australia.

Consumer spending habits are forecast to remain constrained in the first half of 2024 before improvements are recorded later in 2024. However, for the L&I sector, weaker consumer spending will flow through to warehouse demand, particularly as the retail trade sector has been the second most active sector in the leasing market since 2020. Offsetting this, however, will be a continued focus on efficiency, which will drive pre-commitment demand as businesses adopt automation strategies.

Figure 8. Australia Moving Annual Total Retail Turnover (rolling year-on-year change)

10% 12% 14%

0% 2% 4% 6% 8%

Nov-2013

Nov-2015

Nov-2017

Nov-2019

Nov-2021

Nov-2018

Nov-2016

Nov-2014

Nov-2022

Nov-2023

Nov-2020

Source: ABS, Cushman & Wakefield

CAPITAL MARKETS 2024 OUTLOOK | 10