Smaller sites on investors’ shopping lists

Investors have put close to $1 billion into food-anchored shopping centres in the past year, with demand forecast to rise despite weak growth in the retail sector.

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.