Kmart secures first K Home store in Box Hill

Kmart has secured its first standalone K Home store in Australia, committing to a new-format concept that reflects the continued evolution of Large Format Retail.

The circa 3,817 sqm tenancy in Box Hill will see Kmart replace Decathlon with a dedicated homewares and furniture offer.

The deal was negotiated by Chris Parry of Leedwell and represents a strategic repositioning of the space, demonstrating the flexibility of Large Format Retail assets and their ability to respond to changing retailer formats.

The Box Hill store represents the first national trial of the K Home format, a standalone concept focused on home living and Kmart’s Anko product range. The offer is expected to include an expanded selection of furniture and homewares products, including items previously available online.

The move follows Anko’s first Asian store opening in Manila’s Glorietta 2 shopping centre in November 2024, marking another step in the broader development of Kmart’s home and lifestyle offer.

From a leasing perspective, the transaction highlights a structural theme across the market: strong retailer demand and limited available supply.

Since 2020, the retail development pipeline has contracted materially, with new floorspace delivery reaching a 10-year low nationally in 2023. This continues to create challenges for expanding retailers seeking well-located, scalable sites.

Within the Large Format Retail sector, there are currently approximately 365 centres nationally, comprising around 6,000,000 sqm of total floorspace. The average Large Format Retail centre is circa 16,379 sqm, reinforcing the limited number of sites capable of accommodating large-scale occupiers.

The Large Format Retail Directory is produced annually by demand assessment economic firm, Deep End Services, in partnership with the Large Format Retail Association.  Data from the current and 16th edition of the Directory highlights that vacancy rates across the sector remains tight. While Victoria currently sits marginally above the national average, with vacancy increasing from 2.5% to 3.2%, compared with 2.8% nationally, it remains near historic lows and continues to underpin competition for well-located assets.

Chris Parry, Partner at Leedwell, said demand from national retailers remains strong while suitable opportunities are becoming harder to secure.

“We’re continuing to see unprecedented demand from national retailers, but with a distinct lack of supply,” Mr Parry said.

“Opportunities of this scale and quality are becoming increasingly difficult to secure, particularly as new development has slowed and vacancy remains at historically low levels.”

The introduction of the K Home format is particularly relevant in this environment. With a smaller and more flexible footprint than a full-line Kmart, the concept could open up a broader range of leasing opportunities across both shopping centres and Large Format Retail assets.

The transaction delivers a strong covenant outcome for the asset and positions the Box Hill store as an important test case for Kmart’s next phase of growth.