WA Large Format Retail booms amidst sector high demand and new developments
Western Australia’s Large Format Retail sector leads the nation in per capita spending, according to a study by Vend Property and Deep End Services. This has been driven by WA’s strong wages, 8% above the national weekly wage, a lower debt-to-loan ratio compared with other states, and a steady increase in house values.
Meanwhile, a property undersupply has lowered vacancies and driven up rents, making the sector a standout for WA property owners.
Like many other sectors, the Large Format Retail market has undergone a significant transformation in customer and owner behaviour post pandemic, with developers now striving to meet pent-up retailer demand.
Following the 2020 lockdowns, Large Format Retail businesses in categories such as DIY, homewares, furniture, and recreation experienced a surge in consumer spending while many developers and property owners took a cautious ‘wait and see’ approach, leading to a slowdown in new developments and a backlog in the national supply pipeline.
According to Vend Property’s Jeff Klopper, an average of 250,000 sqm of new Large Format Retail space is constructed across Australia each year. However, in 2023, only 60,000 sqm was delivered nationally, with none in WA.
Mr Klopper added, “This shortfall has driven vacancies down and rents up, with Perth’s Large Format Retail vacancy rate falling from 6% in 2020 to less than 2.5% today.”
In 2024, momentum began to shift. WA has already seen new developments such as a 3,500 sqm centre in Belmont and a 6,400 sqm multi-tenancy project in Midland. Looking ahead to 2026, 16 new Large Format Retail centres are in the pipeline, spanning regional towns like Karratha, Geraldton, Treendale, Busselton, and Albany, as well as key Perth metro growth areas including Ellenbrook, Byford, O’Connor, and Mandurah. Notably, and for the first time since 2013, a new Large Format Retail development is planned for Osborne Park.
Collectively, these centres will add approximately 225,000 sqm of new Large Format Retail space, which is nearly twice the size of Osborne Park, WA (currently the largest Large Format Retail precinct in Australia by occupied floorspace).
Encouragingly, construction costs have stabilised following a 67% post-COVID increase, allowing developers to refine feasibility studies and proceed with greater confidence.
This shift has attracted national retailers to the WA market, with more than eight new brands planning a minimum of four stores each within the next three years as a part of their store network plan. The challenge now is securing enough tenancies to accommodate this expansion amidst record-low vacancy rates.
Investor interest in WA’s Large Format Retail market has also surged. In the six weeks from August to mid-September 2024, 154 bids were placed on a standalone Super Cheap Auto site, which ultimately sold at a 5.12% yield. Other notable transactions include Cosgrove’s 2023 purchase of Midland Central for $74.75 million (yielding 6.5%) and the sale of Joondalup Square for $74 million at a 6.1% yield.
Despite broader economic headwinds, the Large Format Retail sector continues to thrive, generating national sales exceeding $102 billion in 2024, representing one-quarter of all Australian retail sales. The sector remains a major employer, supporting over 470,000 jobs across key categories such as furniture, electrical, hardware, and homewares. Large Format Retail floorspace now accounts for approximately one-third of all retail floorspace in Australia.
Across Australia and New Zealand, there are currently 367 Large Format Retail centres exceeding 5,000sqm, collectively encompassing an impressive 6.1 million sqm of retail space.
“It is also pleasing to see vacancy rates in Australian Large Format Retail centres remaining at very low levels, rising only slightly from 2.5% in 2023/24 to 3.1% in 2024/25, emphasising the sector’s resilience and long-term growth potential,” said Mr Klopper.
