Once seen as humble charity shops, op shops have become an integral part of Australia’s retail scene, thriving amid the growing shift towards sustainability and affordability. As consumers seek ethical and budget-friendly alternatives, these stores have carved out a key role in the second-hand economy, challenging traditional retail and reshaping shopping habits.

Sustainability has increasingly taken centre stage in the cultural change. The fast fashion industry, which has a significant environmental and economic impact, contributes approximately 10 per cent of global carbon emissions—more than the combined emissions of international flights and maritime shipping. As awareness of these issues grows, many consumers are turning to op shops as a sustainable alternative, helping reduce waste and lower their carbon footprint.

As people worldwide become more aware of the environmental effects of their consumption habits, the resale market is gaining momentum. Less than two years ago, Australia’s second-hand goods were valued at over 60 billion Australian dollars. IBISWorld valued the resale market at $4.2 billion in 2022.

According to Credence Research, the Australian second-hand apparel market is projected to grow from $890 million in 2023 to $2.4 billion by 2032, reflecting a compound annual growth rate (CAGR) of 11.88 per cent from 2024 to 2032.

Charitable organisations like The Salvation Army (Salvos) and St Vincent de Paul Society (Vinnies) have expanded their retail operations to meet this demand. Salvos has over 400 stores nationwide, while Vinnies has more than 110, offering affordable goods that support their charitable work. This expansion has helped establish pre-loved shopping as a mainstream consumer choice.

Image Below: Merion Properties has recently sold a Vinnies store in Australind, WA, for $3 million at a 5.56% yield through Burgess Rawson

For commercial property investors, the rise of op shops presents an opportunity to secure reliable, long-term tenants. These organisations often sign long leases, providing stable rental income and the potential for future growth. This is already translating to the investment market with yields continuing to fall to currently hover at just over 5.0 per cent.

Many op shops are located in suburban and regional shopping centres and large format retail hubs, where they help rejuvenate these areas and contribute to local retail growth. Unlike the pressures faced by traditional retail in the e-commerce era, op shops maintain a strong physical presence in high-foot traffic zones. The stability of well-known charity brands provides an added level of reliability that many other retailers lack.

From a property investment perspective, the expansion of op shops offers a unique opportunity. These tenants typically offer long-term leases, ensuring steady cash flow. Furthermore, fixed annual rent increases can provide a stable growth trajectory. Established brands like Salvos and Vinnies offer investors’ confidence in the ability of these tenants to weather retail market shifts, reducing risks typically associated with more volatile retail sectors.

Looking ahead, the future of op shops as a commercial property investment class looks promising. The shift towards sustainability, the need for affordable retail options, and the revitalisation of suburban shopping centres position op shops to continue growing in Australia’s retail sector. For investors seeking stable, socially responsible assets with long-term returns, properties leased to op shops present a convincing opportunity.

More reading from Shaun Venables:

Charitable investments pay off - Burgess Rawson | Commo.

BCF large format retail investment sold by Burgess Rawson | Commo.

Investing in Australia’s Pet Industry: A growing market for commercial property - Burgess Rawson | Commo.