Bulky goods retailers baulk at paying for premises awaiting occupation approval
Bulky goods retailers are being forced to pays thousands of dollars in rent on premises they must wait months to use, according to the Bulky Goods Retailers Association.
The BGRA represents 54 brands including Bunnings, Harvey Norman, IKEA and JB Hi-fi.
Currently retailers must submit a development approval application even if few structural changes needed before they move in, the BGRA argues in its submission to the Productivity Commission’s retailing inquiry.
Approval times range from four to eight weeks for a non-food retail business and up to six months for industrial premises after lease agreements have been signed.
“Currently the delays inherent in the DA system mean that a tenant, having signed a lease, then has to pay rent for premises in which they cannot operate, in some cases for several months, resulting in significant costs to business,’ the BGRA says.
It argues small retailers could save $250 a day on early rent commencement and those leasing industrial premises could save $1,000 a day if the Council of Australian Governments adopts NSW’s Commercial and Industrial Code.
The BGRA claims the code “provides a rapid and cost-effective alternative to the DA process”.
“The NSW Commercial and Industrial Code has thus enabled many forms of retail development, including bulky goods retail, to achieve swifter development approvals where the proposed development has minimal environmental impact because complying development applications must be determined within 10 days.
“Where a proposed development is classified as exempt development, no planning approval is required,” the BGRA says in its submissions paper.
Despite the code being in place in since 2009, most NSW councils still require that retailers submit a development approval application.
| Retail (non-food)
| Retail (food)
| Industrial |
Project fit-out value: | $150,000 (110m2) | $150,000 (110m2) | $1,000,000 (10,000m2) |
Indicative assessment cost - Council: | $2,400 | $2,900 | $9,000 |
Indicative assessment cost - Certifier: | $1,900 | $1,900 | $7,000 |
Processing time
| 4 to 8 weeks (average 4 weeks) | 5 to 9 weeks (average 5 weeks) | 12 to 26 weeks (average 12 weeks/84 days) |
Potential early rent commencement savings | $4,500+ (based on $250/day) | $6,250+ (based on $250/day) | $74,000+ (based on $1,000/day) |
Source: BGRA submissions to Productivity Commission
The BGRA forecasts the bulky goods retail sector, which includes retailers of electronics, whitegoods, furniture and automotive parts, will generate sales of nearly $64 billion in 2012.
In April, Jones Lang LaSalle reported that bulky goods retailers along with the regional shopping centre sub-market were driving the increase in the supply pipeline in the first three months of 2011.
Bulky goods retailers that have increased their expansion this year include Bunnings, which plans to open 150 stores nationally over the next four years in response to the roll out of Woolworths’ new hardware brand Oxygen.
Total retail space under construction nationally expanded to 676,170 square metres in the first quarter of 2011, according to Jones Lang LaSalle – substantially higher than the trough of about 470,000 square metres in late 2009, but is still well below the peak reached in mid-2008, when more than 1.4 million square metres of retail space was under construction across the country.
NAB identified bulky goods as the worst performing retail property sector in Australia in its March 2011 update.