Boost to bulky goods sales
One trigger has been the rise in new home sales for the fourth straight month, up by 3.4 per cent in June. Detached house sales rose by 7.3 per cent but multi-unit sales fell by 17.5 per cent.
These gains provide and impetus for consumers to buy new soft furnishings and bulky whitegoods.
As home affordability also improves and interest rates fall, home buyers and occupiers also feel more confident to upgrade with a new couch, bedding and other furniture.
Chief economist at CommSec Craig James said housing had more significant multiplier effects across the Australian economy than the mining sector, so stronger construction and purchase activity will be important in providing fresh momentum to economic growth.
The latest property deal was the sale by Charter Hall of Home HQ Nunawading for $48 million.
Home HQ Nunawading has three anchors, Nick Scali Furniture, The Good Guys and Bev Marks Beds, together with 17 major retailers including Sony Centre, Howards Storage World, JB Hi-Fi, Lincraft and South Pacific Health Club.
According to the Australian head of retail investments at Jones Lang LaSalle, Simon Rooney, many major institutions have been reducing their exposure to "non-core" retail assets - particularly in the bulky goods sector.
"Since 2007, institutional landlords have disposed of over $1.15 billion of homemaker centres in 39 separate transactions," he said. "Private investors have been the most active buyers, and have accounted for almost half of all deals since 2007 [47 per cent], followed by unlisted funds at just 23 per cent.
The associate director of Bulky Goods at CBRE, Chris Parry, said these niche group of investors were driving activity.
"These investors are seeing the asset class as undervalued due to the significant spread between yields and funding, which will only last for a limited time," he said.
Nationally, construction of traditional, multi-tenanted bulky goods centres has slowed, which offered opportunities for landlords to diversify their retail mix or backfill existing vacancies.
"Victoria will account for over 50 per cent of new construction, with 270,000 sq m of bulky goods space due to be developed in the state in 2013," Mr Parry said.
"There has been a slight downward pressure on bulky goods rent nationally, however, with increased competition between several major local players and also international giants such as Costco and Ikea, who are both expanding in Australia, rents are beginning to stabilise."
Frequently Asked Questions about this Article…
The article says bulky goods retailing is showing early signs of recovery as investors buy and remix assets. A key trigger has been rising new home sales (up 3.4% in June), stronger detached‑house sales and improving home affordability. These trends tend to increase demand for soft furnishings and bulky whitegoods, which can lift sales and values for bulky‑goods centres.
According to CommSec chief economist Craig James in the article, housing has big multiplier effects across the economy. Stronger construction and purchase activity can boost consumer confidence to upgrade furniture and appliances, supporting sales at bulky‑goods retailers and making related retail property more attractive to investors.
The article cites Charter Hall’s sale of Home HQ Nunawading for $48 million. Home HQ Nunawading is anchored by retailers such as Nick Scali Furniture, The Good Guys and Bev Marks Beds and includes other tenants like Sony Centre and JB Hi‑Fi, illustrating the type of multi‑tenant bulky‑goods assets attracting buyers.
Jones Lang LaSalle notes institutional landlords have been reducing exposure to ‘non‑core’ retail assets, while private investors have been the most active buyers—accounting for about 47% of deals since 2007—followed by unlisted funds at roughly 23%. CBRE comments that niche investors view the asset class as undervalued because of the current spread between yields and funding.
The article reports slight downward pressure on bulky‑goods rents nationally due to increased competition among local players and international entrants. However, rents are beginning to stabilise as large retailers such as Costco and Ikea expand in Australia, increasing competition but also signalling demand.
Nationally, construction of traditional multi‑tenanted bulky goods centres has slowed, creating opportunities for landlords to diversify tenancy mixes. The article says Victoria is expected to account for over 50% of new bulky‑goods construction, with about 270,000 sq m due to be developed in the state in 2013.
Investors should monitor housing indicators (new home sales and detached vs multi‑unit trends), rent pressure and stabilisation, tenant mix and anchor tenants, the buyer composition (private investors vs institutions), and yield‑to‑funding spreads—factors the article highlights as influencing value and demand in the bulky‑goods sector.
The article states that since 2007 institutional landlords have disposed of more than $1.15 billion of homemaker centres across 39 transactions, reflecting a trend of reducing exposure to non‑core retail assets in the bulky‑goods sector.
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