By Jordan McMullen

Originally published on AFR here: http://www.afr.com/real-estate/falling-fuel-prices-a-boost-for-retail-spending-and-leasing-20160327-gns1xl

Retail centre managers are expecting retail leasing to grow on the back of increased retail spending buoyed by the fall in fuel prices.

Cheaper petrol has freed up household disposable incomes, the latest JLL Retail Retail Centre Manager’s Survey said.

“The big change since the August 2015 survey was the impact of fuel prices. Fuel prices are at or near seven year lows, meaning the average motorist is spending significantly less on fuel and this could translate to more disposable income for other items such as retail goods and services,” JLL head of property and asset management Australia Richard Fennell said.

The most positive factors for turnover outlook highlighted by centre managers in the February survey continue to be issues that are specific to particular centres, such as changes to tenancy profile, growth expectations within the trade area and planned refurbishment activity.

The change in prime minister “which appeared to bring about a slight improvement in political stability” could also lift consumer spending and retail leasing, the report added.

Centre managers were more positive about the trading prospects of the centres they manage compared to six months ago, with 55 per cent of respondents expecting turnover growth in the year ahead, up from 51 per cent in the last report in August last year.

In the second half of 2015, specialty rental grew by 4.2 and 3.1 per cent in both neighbourhood and subregional centres. Specifically, neighbourhood rental growth has nearly tripled since the last report.

Vacancy rates also slightly improved in the neighbourhood centres, down from 3.9 per cent in June to 3.7 per cent in December. But there has been an increase in vacancies in subregional centres.

Casual leasing has also generated new income for these retail centres. 74 per cent of managers surveyed indicated their malls had current opportunities for casual leasing.

Many of the casual renters were charity organisations but “create an uncomfortable experience for customers by approaching customers for donations”, surveyed managers said.

But there are still tough times ahead despite the positive outlook.

“Tenant enquiry remains positive, but only just,” JLL director of strategic consulting David Snoswell said.

The last twelve months have not been very positive – 63 per cent of centre managers reported they had only seen minimal change in tenant interest.

Volatile sharemarkets and low commodity prices continue to dampen retail spending, the report said.