02 STRUCTURAL & EMERGING DEMAND DRIVERS
CUSHMAN & WAKEFIELD | 12
AUSTRALIA'S OCCUPIER MARKET OUTLOOK
CONSUMER SPENDING REMAINS A KEY WATCHPOINT Structural demand drivers remain intact, but the pace of occupier expansion in the near term will depend on household spending.
Consumer-facing sectors account for approximately 70% of warehouse leasing activity, making household spending an important cyclical influence on demand. While spending has remained relatively resilient, higher interest rates, persistent cost-of-living pressures and a softer housing market are expected to constrain household budgets into 2027. Housing conditions are particularly relevant to discretionary retail categories. Historically, there has been a strong relationship between house price growth and discretionary retail sales approximately 12 months later. Recent housing weakness therefore points to a risk of softer spending growth across categories such as furniture, electronics and household goods. As a result, occupier demand from discretionary retail categories is expected to remain selective in the near term. While structural demand drivers remain supportive, the timing and strength of any recovery in warehouse demand will ultimately depend on household spending and business confidence.
Retail sales growth to moderate in 2027 Australian retail sales, annual growth
Housing weakness becomes a retail headwind Annual growth: house prices (12-month lead) vs discretionary retail sales. Historical correlation of 0.84, 2010 to 2026.
10%
40%
35%
8%
30%
25%
20%
6%
15%
10%
4%
5%
0%
2%
-5%
-10%
-15%
0%
2013 2016
2019
2022
2025
2028
House prices, 12-month lead Discretionary retail sales
Dashed lines show forecasts
Actual
Forecast
Source: ABS, Oxford Economics, Cushman & Wakefield Research
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