Queensland is emerging as a national leader in large format retail, supported by population growth, limited supply and investor demand.
The state’s population is forecast to increase by about 17 per cent over the next decade, the highest on the eastern seaboard, according to Colliers. Growth is driven by interstate migration and overseas arrivals, increasing household formation across South East Queensland and regional centres. This supports demand for the segment.
Colliers Queensland’s associate director, retail middle markets, Harry Dever said the market is supported by ‘a combination of population growth, constrained supply and retail spending’.
“That mix is delivering sustained rental growth and some of the strongest investor competition we have seen in years.”
Furniture, appliances, home improvement and bulky goods are among the categories benefiting from new household formation.
In some locations, rents have increased by 20 to 30 per cent in recent years. Gross rents range from $250 to $400 per square metre depending on whether assets are in metropolitan or regional markets, while incentives have declined to about 16 per cent.
Supply remains limited. Development activity is about 53 per cent below pre-pandemic levels due to construction costs, land availability and planning constraints. Vacancy is at 2.8 per cent, according to the Large Format Retail Association.
These conditions are reflected in investment activity. Over the past year, more than $457 million of assets changed hands across 20 transactions, up 330 per cent from the previous year.
South East Queensland and regional markets accounted for most activity, with private capital representing about 70 per cent of transactions.
Colliers transactions with a combined value above $100 million over the past year indicate demand from high net worth investors, syndicators and interstate buyers. Assets including Beenleigh Lifestyle Centre, Morayfield Village, Warwick Home and Co and Repco Max Capalaba attracted investor interest.
Housing development, infrastructure investment and transport upgrades are expanding trade areas and supporting retail sales performance.
Colliers senior research analyst Sam Ryan said population growth and housing delivery could lead to about $4 billion in additional annual household goods spending nationally through to 2035.
“This is a structural demand story that continues to favour large format retail,” he said.
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