Regional shopping centres are experiencing a revival as lower rents and advertising costs attract a wave of new retailers. According to industry experts, these retailers see regional locations as a strategic growth opportunity, marking a significant shift from the post-global financial crisis period. National brands like Officeworks, Baby Bunting, and Early Settler are expanding their footprint in regional towns like Wangaratta, Ballarat, and Bendigo.
Chris Parry, CBRE’s large format retail director, highlighted that the favorable cost environment has empowered retailers to expand with minimal risk. This trend has not gone unnoticed by investors, with a notable increase in transaction activity in neighbourhood shopping centres. In Victoria alone, the retail asset turnover in 2015 is expected to surpass the previous year’s volume, reflecting growing investor interest in the sector.
One such example is CoINVEST, the trustee overseeing the long service leave scheme for the construction industry, capitalizing on the market appetite by listing prime assets like the Coles-anchored Bundoora Square shopping centre. The resurgence in regional retail is evident in centres like Bendigo’s Rocklea Homemaker, which, despite setbacks post-GFC, is now attracting new brands like Baby Bunting and Pillow Talk.
CBRE’s leasing activity in regional Victoria paints a picture of the sector’s vibrancy, with major players like Baby Bunting, Pillow Talk, and Far Pavilions establishing their first regional outlets in the area. Even retail giants like Bunnings are making strategic moves, committing to new developments like the 6800-square-metre building in Yarrawonga, set to open in 2016.
Rents in regional Victoria vary from $100 to $230 per square metre net, with cities such as Geelong, Ballarat, and Bendigo commanding the higher end of the spectrum. Incentives for retailers have also become more competitive, ranging between 10 to 15 per cent, down from previous levels of up to 20 per cent.
The resurgence of retailers in regional shopping centres signifies a broader trend in the retail landscape, where cost-effective expansion strategies and changing consumer preferences are reshaping the industry. As regional centres continue to attract both tenants and investors, the outlook for these locations remains promising in the evolving retail market.
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