Retail fire sale The retail crisis comes amid a swathe of assets on the market. While yields are tightening for office and industrial properties, they seem to be softening for the weaker retail properties. Citi analysts have maintained their negative view on retail landlords such as shopping centre owners, "given a large overhang of assets on the market". "We estimate potential for disposals of about $11 billion of Australian retail assets, or close to three years of typical transaction volume," the Citi analysts said. "We, therefore, expect shopping centre values will continue to fall, as pricing adjusts to help clear the market."

Fuelling concern is the warning that the impact of the large overhang of retail assets is not yet evident, with so many assets remaining unsold. Dozens of centres owned by Blackstone, Stockland and Vicinity, among others, are jostling for new owners. The most recent assets to test the market are Vicinity and Challenger's 100 per cent freehold interest in Corio Central in Geelong and Lennox Village in Sydney. "The consumer remains highly cautious with anything but spending on essentials", says NAB chief economist Alan Oster. Credit:Bohdan Warchomij Based on the weaker consumer sales outlook, NAB's chief economist Alan Oster noted that "the goods distribution industries, especially retail – which is clearly in recession - remain particularly weak, and manufacturing is not far behind." In the NAB Monthly Business Survey for May, Mr Oster says while the retail industry has lagged the other sectors for some time, "the recent deterioration has seen conditions in the industry fall to levels not seen since the GFC".

"This suggests that the consumer remains highly cautious with anything but spending on essentials because of ongoing slow income growth, high debt levels and possibly some concerns over falling house prices," he said. Loading "Forward-looking indicators suggest that the bounce in confidence is likely to be short-lived and that conditions are unlikely to turn around any time soon. We will also continue to closely watch the employment index for a lead on any turning points in the labour market." Underlining the bleak outlook was the most recent retail sales data from the Australian Bureau of Statistics for April, showing retail trade fell by 0.1 per cent, after a 0.3 per cent increase

in March and 0.8 per cent lift in February. In trend terms, retail spending grew by 1.7 per cent in NSW over the year to April – the weakest annual growth rate in seven years.