05/11/2008 - 22:00

Outlook for bulky goods promising

05/11/2008 - 22:00

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PERTH is attracting more large-scale commercial bulky goods complexes, despite the sector experiencing a lull on the back of the credit crisis and global economic downturn, according to real estate agents.

Outlook for bulky goods promising

PERTH is attracting more large-scale commercial bulky goods complexes, despite the sector experiencing a lull on the back of the credit crisis and global economic downturn, according to real estate agents.

At least four new retail complexes for bulky goods - products such as furniture, whitegoods, electrical equipment, bedding and manchester - are either under construction or have plans approved in WA in locations including Malaga, Jandakot, Cannington and Albany.

While some major tenants for these complexes such as Harvey Norman and Retravision are contending with slowing sales growth, bulky goods real estate agencies in Perth believe the sector has a future.

Recent figures from commercial and industrial property services firm Jones Lang LaSalle reveal that bulky goods outlet rents in Perth were up 9.1 per cent for the September quarter, 2.7 per cent above the national average.

But, real estate agents say rents are still cheap enough to allow major tenants to pass on savings to customers.

Outlets in bulky goods hubs such as Osborne Park would pay up to $300 a square metre in rent, while in other areas rents would fetch $200/sqm.

Jeff Klopper, who heads the retail bulky goods department for Australia and New Zealand at real estate company CB Richard Ellis, said although things have slowed in the sector, CBRE was confident of selling its new 14,000/sqm bulky goods retail complex in Clarkson.

"There's been a slowdown really, but then you've got places like JB Hi-Fi which are still on the warpath," he told WA Business News.

"Financing has really been affecting bulky goods a lot, but companies are starting to rally through the hard times, there's not doubt about that.

"The thing is, retailers need to expand and I think it won't be until about 2010 that they start to see the upside, but with bulky goods, tenants need to be rolling out new stores all the time.

"The problem feeding the slowdown is that the owners need to get the retailer to sign off, and then the banks will give them the money. But Perth is well above the rest of the nation. Sydney is simply a basket case right now, Melbourne and Brisbane are pretty good, but Perth is well and truly above the rest."

Gary Ryan, an agent at agency Knight Frank in Perth, said while things looked promising in the long term, the sector had some hurdles to overcome.

"No I certainly don't think things are surging," he said.

"But this is a sector that has a future."

According to Access Economics, WA consumers have continued to restrain retail spending since the end of 2007, causing retail turnover growth to soften, particularly in household goods, a sector which provides many major tenants for bulky goods complexes.

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