Growth in home and furniture retailing has strengthened South Australia’s large format sector, with an influx of both small and large operators helping drive competition and push centres to capacity, according to a CBRE report.
According to the property firm’s latest report, the revival in home and furniture retailing is largely due to SA’s increasing population and subsequent strengthening residential building sector, which has seen South Australia’s housing approvals reach a national high.
“We’re now entering a period of sustained growth, with the upturn in consumer spending helping reignite our homewares retailing sector and drive vacancy rates in large format centres to a low of 1.06 per cent,” the report stated.
CBRE’s report stated both larger and smaller retailers are taking advantage of the improving retail environment, which is helping refresh centres with a dynamic offering mix and improve shopping experience.
The upturn in consumer spending isn’t limited to homewares, the report showed. Interest in bedding, pets and electrical tenants has also picked up, which is further helping maintain near maximum occupancy at major centres across the state.
Across Adelaide, CBRE’s report showed the only major large format centre to have any vacancy is Gepps X, with just 1.8 per cent vacancy attributed to Howards Storage World’s departure earlier this year. Adairs has recently moved into the centre, and negotiations are underway on the smaller tenancies.
“One of the most interesting trends to emerge has been the spike in number of smaller retailers joining our centres, which is helping raise the bar for shoppers,” the report stated.
The outlook for Adelaide’s large format retail sector “looks favourable”, with several retailers planning to expand their presence with more store roll outs in 2017, with CBRE expecting centres to be at capacity or nearing capacity, including the backfilling of the Adelaide’s four Masters stores in the coming months.
The research shows the current environment will provide a basis for rental growth over the next five years, with an average growth of circa 1.5 per cent. By comparison, yields are expected to remain stable at around eight per cent over the next three years.
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