Focus - Large Format Retail
July, 2018 – Switching to Lifestyle Centres
Large format retail centres are seeing a changing tenant mix often including more traditional Shopping Centre or High Street retailers. Planning law changes across many States have facilitated this move.
One of the key drivers of this shift has been the failure of the Masters’ brand and subsequent need for Bunnings to take-up larger store footprints to accommodate the increasing demand. This has presented the opportunity for proactive operators to purchase these vacated sites to create active retail and lifestyle centres.
At the same time, existing centre owners are taking the lead of Brickworks and other innovative centres to transform their traditional formats by introducing a broader range of retailers into their centres. These include supermarkets, gyms, restaurants, bars, childcare, medical, government and general services and play centres.
The increased focus on lifestyle within centres is attractive to investors and centre owners as it provides a pleasant and convenient experience for patrons, increased foot traffic and dwell time and can lower vacancy. Furthermore, new tenants crossing into large format centres usually take smaller tenancies and therefore pay higher rents per square metre than traditional large format retailers, and are capable of producing stronger returns. This has a positive impact on overall performance of these centres.
Retailers are facing challenges such as changing consumer preferences toward value and convenience, growing online competition and high rents within shopping centres. The retail planning changes have provided retailers greater flexibility, allowing them to take-up space in large format retail centres. These centres offer lower rents, greater convenience for customers and opportunities to expand into new markets.
There are several existing centres that have integrated a range of retail uses within their centres including:
- Peninsula Home, Mornington, Victoria – ALDI, Fernwood Gym;
- Epping Hub, Epping, Victoria – Snap Fitness, Kids Space, professional, government and education services, discount groceries, restaurants;
- Brickworks, Southport, Queensland – Ferry Road Markets, restaurants, bars, fashion retailers, medical services, Snap Fitness;
- Homeworld Helensvale, Queensland – play centre, restaurants, beauty, medical and other services, First Choice Fitness;
- Blacktown Mega Centre, NSW –Anytime Fitness, medical and government services, restaurants;
- Kotara Home, NSW – ALDI, Australia Post, medical services, discount retailers, Dan Murphy’s;
- Homeworld Tuggeranong, ACT – ALDI, beauty and medical services, Dan Murphy’s, restaurants, bars, grocery and fashion retailers;
- Joondalup Gate, WA – Coles Express, Dan Murphy’s, education and medical services;
- Playford Plaza, SA – Anytime Fitness.
There are also a number of these lifestyle centres in the development pipeline. These include:
- Ouson Plaza a former Bunnings warehouse in Springvale Victoria, which is fully-leased to The Good Guys, ALDI, Crunch Fitness, Best Friends, Bottlemart, Italian Paesano Restaurant, McDonald’s and Caltex (pad sites); and
- The Great Western Centre situated in Minchinbury, NSW is marketing tenancies suitable for large format, retail trade, childcare, gym and food retailers.
Home Consortium who purchased 61 former Masters’ stores in August 2016 is adopting a similar approach within its portfolio developing the stores into lifestyle hubs focusing on daily retail needs (Coles and Woolworths), leisure, lifestyle (gyms), education, homewares and electrical. Eight of these stores have opened – Marsden Park, Penrith and Rutherford in NSW, Pakenham and South Morang in Victoria, and Toowomba, North Lakes and Tingalpa in Queensland with the entire national portfolio of centres expected to open by early 2019.