By Sarah Falson
MELBOURNE: Bulky goods site construction has slowed this year in Melbourne despite developments across Australia reaching unprecedented heights, with most new centres built in the past three years being anchored by brand-name tenants such as Harvey Norman.
Almost 80,000 square metres of bulky goods construction is scheduled to take place this year, compared with 131,454 square metres last year and 142,451sqm the year before, according to a report by the Sydney Morning Herald.
“Most of the new centres now being built are anchored by brand-name, quality tenants, such as Harvey Norman and Bunnings, which tend to attract long-term leases, helping to sustain the ongoing success of the centres,” CBRE senior associate director Stephen Thomas said in the report.
Thomas estimates the forecasts of the actual amount of bulky-goods construction this year to be closer to 29,386 square metres, and puts this down to the prevalence of aforementioned high quality tenants.
Even so, Harvey Norman has a few million dollars worth of bulky-goods construction planned for the next 18 months, including a 45,000 square metre site at Springvale, a $120 million, 44,000 square metre site at Frankston and a $150 million, 40,000 square metre redevelopment of the Nylex site at Mentone, according to the report.
Further south, Harvey Norman has also signed a $70 million joint venture for a bulky goods development in Tasmania, which will take the form of a 39,000 square metre bulky goods retail homemaker centre at Cambridge, outside of Hobart.
Harvey Norman will have an estimated $195 million from the sale of its stake in Rebel Sport to finance the development. The appliance and furniture retailer already anchors the SupaCenta in Sydney’s Moore Park, which is a bulky goods homemaker centre.
According to a report released by BIS Shrapnel in January this year, the total amount of bulky goods retail floorspace in Australia currently stands at 4.6 million square metres.
Although it is believed there will be another building surge before the year is out, the report said that the bulky goods sector is entering a maturation phase.
“We are already seeing signs many areas are adequately supplied with bulky goods floorspace and believe current demand is insufficient to justify continued extraordinary growth in floorspace,” said BIS Shrapnel senior project leader and author of the report, Maria Lee.
“The ‘golden age’ of bulky goods retailing is past. Over the four years to June 2005, average annual growth in consumer spending on bulky goods items was over 10 per cent in real terms as the sector benefited from a one-off shift to mortgage-backed debt. This cheaper source of funds facilitated the purchase of ‘must have’ items such as plasma TVs,” she said.
“Spending eased to 7.5 per cent in the year to June 2006 and is expected to reduce further to under five per cent over the next three years. The cracks that have been appearing will widen and spread.”