State’s retail market bulks up

THE Perth market is preparing for a new bulky goods precinct as demand pushes the development of a new specialist retail area south of the river.

While there are still plenty of redevelopment opportunities in areas such as Osborne Park, there also are considerable barriers for retailers to overcome, including the cost and availability of well-located land, according to Colliers International manager retail leasing Glenn Dumbrell.

“I think there is room for another bulky goods precinct,” Mr Dumbrell said.

“One area is Mandurah, because it’s outside the metropolitan area, but with the [new] train line it’s just a matter of time before the Perth and Mandurah metropolitan areas are connected.

“It will all come down to the developers securing three anchor tenants.”

He said it was fairly clear that somewhere south had to be developed.

In Australia there are only about 10 to 12 retailers who are looking for retail space over 1,000sq m, Mr Dumbrell said.

“If you’ve got the right product and the right parcel of land you can do deals with the majors,” he said.

“Any bulky goods retailer will take on a good location.”

In addition to the traditional bulky goods retails – Bunnings Ware-house, Harvey Norman and Myer Megamart – the burgeoning discount retailers are on the lookout for bulky goods sites.

Red Dot, WA Salvage and newcomer Crazy Clark’s are on the lookout for well-located bulky goods properties.

“Most of the [bulky goods] retailers are very open minded,” Mr Dumbrell told WA Business News.

“It comes down to location and it can’t conflict with the current stores.

“There’s plenty of room for expansion and a lot of local investors are getting retailers such as Crazy Clark’s to look at other locations.”

It’s understood that the Perron Group’s Gateways Shopping Centre, south west of Perth, is considering a major redevelopment, which will include an expansion of the front of the property to include bulky goods retailing.

Industry sources indicate a national retailer is interested in taking 6,000sq m.

Byvan Leasing associate director Anthony Scaffidi said the market for discount retailers was strengthening in WA.

“It’s a different type of retailing and what’s held these guys out in the past is rent, particularly on the ground floor, which is why someone like Crazy Clark’s has gone upstairs [in the city],” he said.

“I’ve had inquiries from other discounters.

Another discount retailer, Gone Bazaar, is also expanding its store in the city, moving from a location on the Hay Street Mall to Murray Street.

And it seems to be a growing market. Red Dot also is moving into mega-stores, as well as moving out of 300sq m stores into 1,000sq m spaces.

The convenience of the bulky goods retailers is a survival tactic for some of the larger players, Remax associate Peter Millard said.

The housing boom has fuelled the continued expansion in this sector, particularly the growth in the first home buyers’ market, he said.

“This trend keeps rising and it’s making it increasingly hard to find property over 5,000sq m,” Mr Millard said.

Prime suburbs for growth in this type of retail property development have been Joondalup, Osborne Park, Midland, Cannington, Mandurah and, at the top end of the market, sections along Stirling Highway.

“Demand is pushing up prices. It’s getting to a point where the [big] parcels of land are getting above market price,” Mr Millard said.

“Then it becomes hard to make the deals stack up.

“We’ve got a few owners who had land banked in areas that they could see would be developed, like Wanneroo, Mandurah, Rockingham and north of Joondalup.

“They can now make these bits of land work.”

However, with rising home values, owners are sometimes opting for residential developments that deliver higher returns, he said.

While a major retail development is a powerful sales tool for marketing subdivisions, the major retailers tend to want some initial residential developments before they commit to a new store.

There are still opportunities for investors to pick up large parcels of land on the outskirts of the city but development is pushing the margins further and further away, Mr Millard said.

“I guess if people are looking far enough out … but it’s become more difficult,” he said.

“Retailers want the property but it’s got to have the fundamentals and the demographics to make it work.”

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