The Australian Large Format Retail (LFR) market has witnessed a remarkable surge in investment demand, as highlighted by recent data from Colliers Research. The second quarter of 2024 saw a 47% increase in transaction volumes compared to the previous year, marking a notable appeal in the sector.

Nik Potter, Director of Colliers Research, explained, "Although consumer spending on household goods have moderated due to cost-of-living pressures, the introduction of Stage 3 Tax cuts and some of the strongest population growth on record is creating a significant tailwind for LFR retailers, where we are seeing tenant demand remains strong. This is largely attributed to the limited availability of new retail space, which has supported the rental growth observed throughout the year."

In 2024 year-to-date (YTD), the LFR market has recorded $346 million in transactions across 13 LFR centres, reflecting a substantial 70% increase in transaction volume compared to the previous year.

The Colliers Retail Middle Market team has played a pivotal role, securing $222 million in LFR transactions across eight centres, capturing a 63% market share of all transactions YTD.

Victoria has emerged as a leader in the LFR sector. Following a strong 2023 with the sale of Chirnside Lifestyle Centre for over $50 million and Dan Murphy's Shepparton for $13 million, 2024 has carried on the momentum as Colliers Retail Middle Markets has transacted Shepparton Retail Hub for over $11 million in February and the record-breaking sale of HomeCo Ballarat for $54 million in June.

Colliers Retail Middle Market’s expert Tim McIntosh has managed 91% of successful LFR transactions in Victoria over the past 12 months, underscoring Colliers' strength in maximising LFR investment value.

"The retail market has shown remarkable resilience," said Colliers Retail Middle Market Director Tim McIntosh. "The limited supply of high quality investment stock in a sector experiencing increased buyer demand is reflected in the strength of the results achieved nationally.”

The recent off-market sale of HomeCo Ballarat, managed by Colliers Tim McIntosh, on behalf of HomeCo Daily Needs REIT, set a new record value in regional Victoria's LFR sector with a sale price of $54 million and a 4.0-year Weighted Average Lease Expiry (WALE). The centre, located at 333 Gillies Street, North Wendouree, Victoria, is fully leased with a 93% tenant weighting national tenants, including Spotlight, Super Cheap Auto, PetBarn, Anaconda, BCF and Fantastic Furniture.

Tim McIntosh, added, "The LFR sector is experiencing an uplift in buyer demand from new buyer groups, including superannuation, syndicate and private capital, with investors drawn to fixed annual review mechanism and robust tenant demand from predominantly national tenants.”

Related LFR Reading:

Strategic $107.5 million Melbourne acquisition boosts HomeCo Last Mile Retail Logistics Fund - CBRE and JLL  | Commo.

The Bayview Centre sold to MLC Asset Management in $57m deal - Colliers | Commo.

CBRE - Private investors dominate LFR investment market | Commo.

New appointment to grow Colliers Large Format Retail and Project Leasing business in Queensland | Commo.

From COVID crosshairs to 2023 most traded property asset: Retail fund/syndicate and private investment boost | Commo.

Scaling Up: The Rise of Large Format Retail – by Yosh Mendis Burgess Rawson – National Partner | Commo.

Bunnings Collingwood for sale by Burgess Rawson | Commo.

MaxCap and Troon sell Chirnside Lifestyle Centre to IOOF Investment Services Ltd c$50m - Colliers & Stonebridge  | Commo.

Queensland sale highlights investor demand for well established LFR assets - CBRE  | Commo.

HomeCo Box Hill sold to off shore private investors for $67,500,000 in major off-market transaction - JLL  | Commo.

Epping Hub sold to Forza Capital $70,250,000 by JLL  | Commo.