- Almost $1.5 billion in LFR assets were transacted in 2020
- Savills said subsectors are diverging
- Specialty tenants prove risky
In recent months, retail seemed to be making a recovery, with figures trending up overall. That report, citing ABS figures, was back in May.
With most of the country once again plunged back into lockdowns, the outcomes will be interesting to see. Smaller retailers may suffer, while large format retailers (LFRs) can do well.
In the latest Savills Australian retail property report, the divergence between subsectors was confirmed.
While regional and sub-regional sectors were hardest hit, large format and neighbourhood retail has fared well. This was very much the case when Aventus reported half-yearly figures that were less dire than Vicinity and Scentre Group. Vicinity reported smaller losses in neighbourhood retail than other subsectors.
HomeCo also did well in the large format, with the company making a number of acquisitions earlier this year.
This subsector represents more than 24.7% of all retail sales, and employs almost half a million Australians.
“Supermarket anchored neighbourhood centres as well as large format centres have continued to perform well and a clear divergence between discretionary and non-discretionary centres has become apparent in both sales and leasing metrics.”
The report said that throughout 2020, large format retail had $1.46 billion exchanged across 36 transactions.
The Savills report said “discretionary retailers”, including clothing and footwear, and department stores, saw sharp declines over the past 12 months.
The performance of those retailers underpinned the poor performance of regional and sub-regional centres, shops which also were negatively impacted by the reducing footprints of department stores such as David Jones and Myer in recent years.
“As a result, many landlords have filled vacancies with specialty tenants which have proven to be far riskier, particularly those exposed to fashion.”
Retail on Cloud 9
Online sales made a predictable jump, with year-on-year growth in July of 62.6%.
While it did taper off towards the end of 2020, it continues to go through waves as lockdowns come and go.
Hardware and gardening also saw record highs, with home renovations becoming popular during the pandemic – so much so, Bunnings took out top spot for the online retailer awards.