The large format retail sector is evolving on the back of changing consumer preferences, increased competition and planning changes. This is resulting in a changing retail mix and the growth of large format lifestyle centres. In turn this is helping drive continued demand for space and falling vacancy in most states and keeping vacancy from blowing out further in Queensland and Western Australia.
One of the key drivers of this shift has been the failure of the Masters’ brand and subsequent need for Bunnings to take-up larger store footprints to accommodate the increasing demand. This has presented the opportunity for proactive operators to purchase these vacated sites to create active retail and lifestyle centres.
With the demand for household good rising due to increasing populations, residential developments and low interest rates, the sector remains strong.
The increased focus on lifestyle within centres is attractive to investors and centre owners as it provides a pleasant and convenient experience for patrons, increased foot traffic and dwell time and can lower vacancy.
Furthermore, new tenants crossing into large format centres usually take smaller tenancies and therefore pay higher rents per square metre than traditional large format retailers, and are capable of producing stronger returns. This has a positive impact on overall performance of these centres.
Retailers are facing challenges such as changing consumer preferences toward value and convenience, growing online competition and high rents within shopping centres. The retail planning changes have provided retailers greater flexibility, allowing them to take-up space in large format retail centres. These centres offer lower rents, greater convenience for customers and opportunities to expand into new markets.
Home Consortium who purchased 61 former Masters’ stores in August 2016 is adopting a similar approach within its portfolio developing the stores into lifestyle hubs focusing on daily retail needs (Coles and Woolworths), leisure, lifestyle (gyms), education, homewares and electrical.
Eight of these stores have already opened – Marsden Park, Penrith, Rutherford and Rouse Hill in NSW, Pakenham and South Morang in Victoria, and Toowoomba, North Lakes Tingalpa and Morayfield in Queensland with the entire national portfolio of centres expected to open by early 2019.
Home Consortium Rouse Hill and Morayfield were completed after the m3property Strategist report was published.
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