The Australian Large Format Retail (LFR) market has witnessed a remarkable surge in investment demand, as highlighted by recent data from Colliers Research. The second quarter of 2024 saw a 47% increase in transaction volumes compared to the previous year.
Colliers Research director, Nik Potter said, “Although consumer spending on household goods have moderated due to cost-of-living pressures, the introduction of Stage 3 tax cuts and some of the strongest population growth on record is creating a significant tailwind for LFR retailers, where we are seeing tenant demand remains strong. This is largely attributed to the limited availability of new retail space, which has supported the rental growth observed throughout the year.”
In 2024 year-to-date (YTD), the LFR market has recorded $346 million in transactions across 13 LFR centres, reflecting a substantial 70% increase in transaction volume compared to the previous year. The Colliers Retail Middle Market team has secured $222 million in LFR transactions across eight centres, capturing 63% market share of all transactions YTD.
Victoria has emerged as a leader in the LFR sector. Following a strong 2023 with the sale of Chirnside Lifestyle Centre for over $50 million and Dan Murphy’s Shepparton for $13 million, 2024 has carried on the momentum as Colliers Retail Middle Markets has transacted Shepparton Retail Hub for over $11 million in February and the record-breaking sale of HomeCo Ballarat for $54 million in June.
Colliers Retail Middle Market expert, Tim McIntosh has managed 91% of successful LFR transactions in Victoria over the past 12 months.
“The retail market has shown remarkable resilience. The limited supply of high-quality investment stock in a sector experiencing increased buyer demand is reflected in the strength of the results achieved nationally,” he said.
The recent off-market sale of HomeCo Ballarat, managed by McIntosh, on behalf of HomeCo Daily Needs REIT, set a new record value in regional Victoria’s LFR sector with a sale price of $54 million and a four-year Weighted Average Lease Expiry (WALE).
The centre, located at 333 Gillies Street, North Wendouree, Victoria, is fully leased with a 93% tenant weighting national tenants, including Spotlight, Super Cheap Auto, PetBarn, Anaconda, BCF and Fantastic Furniture.
“The LFR sector is experiencing an uplift in buyer demand from new buyer groups, including superannuation, syndicate and private capital, with investors drawn to fixed annual review mechanism and robust tenant demand from predominantly national tenants,” McIntosh added.