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CONSUMER spending on household goods is booming, signalling positive conditions for large format retail according to research by Colliers International.
The household goods sector saw the most growth of all retail categories, with an eight per cent lift in the twelve months to March this year.
Sales volume growth also increased by 11.3 per cent over 2014 the strongest annual growth rate for the category in more than 10 years.
Colliers International head of retail Michael Bate says favourable economic conditions has encouraged Australians to spend up.
"With low interest rates and a strong housing market, Australians are investing more in their castles," Bate says.
"This is great news for our large format retail sector, which is enjoying favourable conditions as hardware, garden supplies, electrical goods and furniture are all back in vogue."
Rentals in the large format retail sector have remained stable in the past six months, with select markets starting to experience some upside in rents.
The pipeline of new supply within the large format sector has been dominated by the hardware category.
Colliers says strong growth in the sector has been driven by rising house prices and consolidated by a lift in housing supply and transactions, and is also reflected in the recent strong performance by retailer Bunnings.
Director of research Nora Farren says overall the retail sector has a fairly bright outlook.
"The number of shopping centres currently under redevelopment, about to commence construction and in the planning phase has increased markedly," Farren says.
"The pace of supply is now anticipated to be above long-term average levels over the next few years."
Major institutional owners currently have more than $10.5 billion worth of retail development in the pipeline, across about 95 projects. The regional shopping centre sector will account for roughly $7.8 billion of the forecast supply.
"As a percentage of total stock by sector, we expect the supply of regional shopping centre floor space to provide additions equivalent to around 10 per cent of the existing market over the next three years," Farren says.
"Moving forward we expect that supply additions will largely be absorbed by growth in retail sales turnover."
Retail sales in 2015 are expected to continue to grow steadily at similar rates to 2014.
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