Hardware giant Bunnings is chasing the medium-density apartment boom with a big pipeline of development projects that include turning vacant office buildings and unloved retail property into its trademark DIY warehouses.
“We see dozens of opportunities around Australia and New Zealand where non-standard Bunnings store formats, both small and large, will form part of our strategy in more densely populated and tightly held metropolitan locations,” Andrew Marks, general manager of property at Bunnings, told AFR Weekend.
For Bunnings it’s a captive market: new apartment dwellers need home furnishings, pot plants and storage containers while local tradesman need paints, screws, nails and timber.
“We’re able to do stores as small as 1000 sq m compared with our purpose-built warehouses which range in size from 5000 to 25000 square metres,” Mark said.
“We’re breathing new life into old buildings and bringing in retail foot traffic.”
Last year Bunnings, a subsidiary of Wesfarmers, opened a 1500-sq-m warehouse on trendy Sydney Road in Brunswick after re-fitting a former Spotlight fabric store. It also undertook its first office conversion with a 7000 sq m store opening in a two-storey office building on Victoria Parade in Collingwood.
Hip, gentrifying suburbs
Both Bunnings stores are in hip, gentrifying Melbourne suburbs, where hundreds of new apartments have sprung up in recent years (and hundreds more are still to come), part of a massive demographic shift driven by downsizing Baby Boomers and young professionals wanting to live close to the centre of town.
In Collingwood, Bunnings collaborated with the owner, a private investor, on a $46 million re-fit that included strengthening the floor to take the weight of its products and adding a travelator, lift and small cafe.
The 1980s building, formerly occupied by Kodak, had stood empty for years with the owners committed to an office refurbishment before striking a deal with Bunnings.
“The owner tipped some capital into the re-fit, but they get the Wesfarmers lease covenant in return,” Marks said.
Despite it being significantly smaller than new super-sized Bunnings warehouses, the Collingwood store holds 96 per cent of A-range stock with only the big bulky products not on offer. But who needs a ride-on lawnmower when you’re living in a small apartment?
“Paint, art supplies and storage products are very popular while our little nursery does really well too,” Marks said. “The tradies love it because it means they don’t have drive 10 or 20 kilometres to one of our big stores to stock up on items they need.”
This year will be another big year for store refits with a 7600-sq-m multi-level Bunnings warehouse to backfill space in Chadstone Home HQ, a large format retail centre, and a 7000-sq-m store to open in what was a Target store in the Ringwood Square Shopping Centre.
In the pipeline is the proposed conversion of a 3000-sq-m JB Hi-Fi store in Mount Gravatt in Brisbane’s south eastern suburbs and the doubling of a 2200-sq-m Bunnings in Indooroopilly, an inner Brisbane suburb, that was previously a Coles supermarket.
There will also be opportunities for apartment developers to get their hands on a Bunnings lease with retailer in the process of securing development approval for a residential project in Doncaster in Melbourne’s eastern suburbs after resolving a dispute with the local Westfield mall.
The new project will comprise over 300 apartments above and surrounding a two-level Bunnings, which will have a more understated facade. “We’re working on a second Bunnings-anchored residential development,’ he said.
But most of the focus will be on re-purposing existing buildings. “It’s all about format diversity and flexibility. We want owners looking to recycle their assets to think about working with us,” Marks said.