Retailers and landlords have been dealt another blow, with less than half of managers across 173 shopping centres nationwide predicting any sales growth in the year ahead.
Apparel is the hardest hit category, offset to some extent by food sales. But rents are flat and incentives to entice tenants are rising.
According to a monthly sentiment survey from Jones Lang LaSalle, not even the recent drop in interest rates could revive the flagging consumer outlook.
This comes at a time when the traditional end of June "half-yearly clearance sales" have started four weeks early.
In short, instead of red sales signs, some retailers are thinking of waving white flags.
The Retail Centre Managers' Survey for May paints a bleak picture of flat leasing inquiry, with 61 per cent reporting no change to inquiry levels over the quarter.
Vacancy rates in sub-regional centres - defined as a medium-sized shopping centre with at least one full-line discount department store, a major supermarket, 40 specialty shops and sized between 10,000 and 30,000 square metres - are at the highest since the survey began in September 2011. The vacancy rate over the past 12 months was 3.4 per cent.
The survey, conducted monthly across Jones Lang LaSalle's managed portfolio of 173 centres, noted that the Reserve Bank decision to cut the cash rate in early May came before the survey was conducted but did not lead to a greater level of confidence in centre managers.
The head of Australian property management at JLL, Richard Fennell, said the survey found that recent consumer sentiment data mirrors the sentiment of centre managers, with consumer sentiment falling by 7 per cent in May and 11.7 per cent over the past two months, to now sit at 97.6 - below the 100 neutral mark.
"The retail market remains challenging. The improved sentiment of centre managers reported in our February 2013 survey was short-lived," Mr Fennell said.
He said it was evident retailers and landlords were moving to the "adapt to survive" model.
As seen in retail sales figures from the Bureau of Statistics and the major landlords, food and food catering continue to outperform the total retail market.
Mr Fennell said specialty rental income growth had slowed, particularly for sub-regional centres, to an average of just 1.2 per cent, down from 3.8 per cent a year ago.
In contrast, neighbourhood centres have reported average annual rental growth over the past three quarters of between 3.3 per cent and 3.6 per cent.