Retail clamour fires bulky goods take-off

Jul 21st, 2004

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Article by:
Elicia Kennedy

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CB Richard Ellis' second quarter Perth retail report estimates that the bulky goods supply market has the potential to expand by up to 25 per cent over the next 12 to 18 months from 450,000sqm. 

"There has been significant investor and retailer demand for prime locations to fuel additional supply," it said, citing research by the firm's W A manager of research and consulting, Andrew Woodley-Page.

New players include Makro, which has anchored a new 6685sqm property in Canning Vale and committed to another 6750sqm centre in Mandurah.

Official data shows that WA household goods retailing, including trade figures for furniture and floor coverings, leapt nearly 26 per cent in calendar 2003 on the back of the buoyant housing market and soaring renovation activity.

And though the growth has slowed, the experts still see plenty of scope for further expansion in the bulky goods market.

"Where appropriate, shopping centre owners are now looking at bulky goods as a complement to their existing centre sites, although bulky goods is being recognised as an asset class in its own right," CB Richard Ellis said.

Associate director Jeff Klopper said bulky goods retail space was the flavour of the month, citing a lack of properties in Perth's high-profile locations in Osborne Park, Canning, Myaree and Joondalup to meet demand.

"The land is not enough and there are more retailers to come," Mr Klopper said.

Colliers International's David Cresp agreed the bulky goods market had taken off over the past three years.

"More of the national companies that don't have a presence are starting to look at W A and those that do are looking to expand in WA," Mr Cresp said.

"The growth prospects in the east are becoming more limited and companies are starting to focus on WA."

Unlike the housing slowdown in the Eastern States, land sales in WA were continuing to boom, feeding the demand for hardware and household goods, he said.

Lower maintenance costs in comparison to shopping centres, which required constant upkeep, was another factor in the trend towards bulky goods retail centres.

He predicted expansion in the bulky goods to continue for the next couple of years, although he said that approvals were a limiting factor as councils grappled with industrial and retail zoning issues.

Lease Equity's Jim Tsagalis said WA was the last frontier for national company expansion, and robust financial markets and new floats had also freed up equity for national rollouts.

"The key locations are flourishing," Mr Tsagalis said.

"There is still an amount of growth left in terms of new players entering the market."

But he warned that increased building cost and rising land prices would weigh on the bulky goods market in the longer term. 

According to the CB Richard Ellis retail report, W A also surpassed the nation in total returns on retail property.

In terms of investment performance, retail has outperformed office and the industrial sector over the long term.

In the year to March, WA retail returned 18.3 per cent, one per cent higher than the Australian retail market figure.

Source: The West Australian - 21st July 2004

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