May 2015 – CBRE has predicted 2015 will be a positive year for all
sectors of large format retail, with buoyant housing activity in the past 18 months fuelling uplift in the retail environment and benefiting retailers.
On the back of falling
fuel prices and low interest rates, prospects for 2015 remain positive with retail
sales volume growth expected to be strongest in NSW and VIC according to CBRE’s
latest Market Insights report.
report highlights a significant improvement in market conditions throughout
2014, with many retailers revitalising their expansion programs and investment
sales of multi-tenanted centres achieving continued yield compression.
The buoyant level of consumer spending in 2014 was largely
underpinned by sizeable activity in the housing sector. As a result of improved
conditions, furniture retailers - whose expansion was largely dormant during
2013 - saw the largest shift, improving from 1% (average for 2012/13) to over 8%
growth in 2014.Sales of household
goods also reached a seven-year high in the December quarter of 2014.
the total new retail leasing transactions completed by CBRE across Australia in
2014, furniture retailers represented approximately 26%, over 10% more than the
second highest retail group.
CBRE Head of Large Format Retail, ChrisParry, said this resurgent growth in the past year had led to stability in large format retail sales turnover per square metre in
addition to increased tenant demand.
“Adding to improved
conditions on the demand side, three of the past five years have recorded
supply levels less than half the annual average since 2000, so oversupply has
become less of a concern than previously. This translated to prime rent growth
of 2.6% nationally in 2014,” Mr Parry said.
The shortage in housing, particularly in NSW, WA and QLD saw
a high level of dwelling approvals in 2014, and this is expected to continue as
those states are still relatively undersupplied relative to their population
“The continued strong residential construction activity will
effectively drive higher
consumer demand for large format retail products, underpinning the success of
the large format retail sector,” Mr Parry said.
interest rates and oil prices will further lift consumer confidence and
consumption, which will benefit retailers and
help support more favourable rental growth in the retail sector in 2015/16
according to CBRE’s Market Insights report.
oil prices would add $6bn in additional household spending capacity in 2015 if
fuel prices remain at current levels, roughly 2% points of retail sales.
a buoyant housing sector and improved consumer confidence will bode well for
household goods sales,” Mr Parry said.
across Australia show the minimal vacancy rates for large format retail spaces
are set to continue, resulting in potentially higher rents and increased
construction of large format retail outlets to meet demand.
a result of recent growth in the market, CBRE has grown its Large Format Retail
business platform across Australia, and we have welcomed an additional three
operators to our business line,” Mr Parry said.
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 52,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 370 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.