Large format retail boom rolls on as tax cuts boost sales
The HomeCo Daily Needs REIT has sold HomeCo Ballarat for $54m.
The country’s large format retail market is locking in its status as one of the most in-demand areas, with the HomeCo Daily Needs REIT offloading its Ballarat property to a private investor for $54m.
The off-market sale, handled by Colliers Tim McIntosh, continues the surge in investment demand in the sector, with a 47 per cent jump in volumes in the second quarter of 2024, compared to the previous year.
“The retail market has shown remarkable resilience,” Mr McIntosh said. “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.”
The centre, at 333 Gillies Street, North Wendouree, was chased by private groups, with property records showing it was picked up by a Ballarat-based property investment and development company. It is fully leased with a 93 per cent weighting of 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 mechanisms and robust tenant demand from predominantly national tenants,” Mr McIntosh said.
Colliers Research director Nik Potter pointed to consumers having more cash in their pockets as a big driver for the sector: “Although consumer spending on household goods has 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 large format retailers, where we are seeing tenant demand remain strong.”
Mr Potter said this was largely attributed to the limited availability of new retail space, which has supported the rental growth observed throughout the year.
In 2024, the large format retail market has recorded $346m worth of transactions across 13 centres, reflecting a 70 per cent lift in transaction volumes, compared to the previous year.
Victoria has emerged as a leader in the large format retail sector. After a strong 2023, with the sale of Chirnside Lifestyle Centre for more than $50m and Dan Murphy’s Shepparton for $13m, this year has carried on the momentum, with The Shepparton Retail Hub selling for more than $11m in February.
