This article is from the Australian Property Journal archive
RECORD low vacancy rates across Adelaide’s large format retail (LFR) sector has spurred a number of new development projects that will create a big box hot spot extending 15 kilometres across the northern suburbs.
CBRE data shows a vacancy rate in the sector of just 0.58%, well below the 4.68% level recorded pre-COVID and having tightened significantly this year, dropping from 1.85% in the March quarter thanks to strong consumer spending.
Large format retail rents have continued to rise, with growth of 2.2% year on year recorded in the June quarter, following a 6.1% increase in the corresponding period last year.
Among the new development projects are a circa 4,000 sqm site at Munno Para and a circa 3,500 sqm site at Parafield. These will create a belt of five major retail sites across 15 kilometres stretching from Gepps Cross to Elizabeth Playford Plaza.
There is also a major new big box centre that has been released to the market at Angle Vale, next to the Bunnings and fronting the Northern Expressway.
CBRE’s Adelaide LFR director Dallas Sears said the area is one of the fastest growing residential areas in Adelaide and the demographics show that large format retail is under-represented in this area.
“There is a real need for a quality retail centre in this location to support the influx of new residents.”
Sears recently negotiated four off-market leasing deals next to the Mt Barker Homemaker Centre.
“We had more tenant interest than we had space, which clearly demonstrates the increased demand for LFR, as has the success of a Seaford Road project where we’ve leased three of the five available tenancies,” she said.
“Many of these new projects are in areas experiencing high residential growth with a mix of new residents, consisting of mainly young families, along with established housing.”
The Adelaide LFR market initially benefitted during the pandemic from working from home restrictions, which underpinned a spike in consumer spending in the retail sector, and the market had continued to tighten even as people returned to the office and overseas travel resumed, Sears said.
She said that while there were some headwinds, including rising construction costs for developers and interest rate increases to combat inflation, some LFR sectors would be less impacted than others and there was strong continued demand for available leasing opportunities.
