Smaller sites on investors' shopping lists
The acquisition by Charter Hall Retail REIT of Southgate Plaza in Morphett Vale, South Australia, for $60 million, highlights the demand for sub-regional centres (less than 20,000 square metres in size), according to agents.
The Australian head of retail investments at Jones Lang LaSalle, Simon Rooney, said total sub-regional transactions for 2013 were now close to $1 billion, following $983.2 million of sales last year.
Southgate is anchored by a recently expanded Target store and a refurbished Coles supermarket.
‘‘The amount of sub-regional transactions this year to date is already about 55 per cent above the 10-year long-term average of $618 million and highlights the improvement in liquidity in this sub-sector,’’ Mr Rooney said.
‘‘While the market is highly liquid at present, investors are still very discerning and focused on the core quality centres with strong growth potential. Centres that meet these criteria are being very aggressively pursued and competitively sold.
‘‘The growing pool of investors targeting this asset class is providing some vendors with the confidence to progress with sales,’’ Mr Rooney said.
Other recent sales were by Knight Frank’s Dominic Ong, Andy Hu and John Bowie Wilson, in conjunction with Sotheby’s, of the 13 available retail shops at the Quay Retail complex within the Chinatown precinct of Sydney for about $20 million.
According to the agents, the demand was comprised of 90 per cent local demand and 10 per cent offshore Asian investors.
Mr Ong said the Quay Retail was made up of two level retail areas anchored by a Woolworths supermarket and generated plenty of interest from specialty retailers looking to secure a location within the development.
Frequently Asked Questions about this Article…
Investors are drawn to food-anchored shopping centres because they offer stable returns and are seen as resilient investments, even when the retail sector experiences weak growth. These centres often have strong anchor tenants like supermarkets, which attract consistent foot traffic.
Sub-regional shopping centres are appealing to investors due to their manageable size, typically less than 20,000 square metres, and their potential for strong growth. They are often anchored by major retailers, making them attractive for their stability and liquidity.
The demand for sub-regional shopping centres has increased significantly, with transactions in 2013 already 55% above the 10-year long-term average. This surge highlights improved liquidity and investor confidence in this asset class.
Anchor tenants, such as supermarkets and large retail stores, play a crucial role in the attractiveness of shopping centres by driving consistent customer traffic and providing a stable revenue base, which in turn makes these centres more appealing to investors.
The current shopping centre market is primarily driven by local investors, who make up 90% of the demand, with the remaining 10% coming from offshore Asian investors. This diverse investor base contributes to the competitive nature of the market.
Recent transactions, such as Charter Hall Retail REIT's acquisition of Southgate Plaza for $60 million and the sale of retail shops at the Quay Retail complex for about $20 million, underscore the strong demand for shopping centres with growth potential.
Investors view the current market for shopping centres as highly liquid and competitive, with a focus on acquiring core quality centres that offer strong growth potential. This has led to aggressive pursuit and competitive sales of desirable properties.
The growing pool of investors targeting shopping centres is providing vendors with the confidence to proceed with sales. This increased interest and competition among investors are driving up demand and prices for quality shopping centre assets.
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