Defensive Retail Assets Popular
Major retail assets with strong defensive characteristics continue to be popular, with a shopping centre-anchored mall in Caroline Springs and the large format Watergardens Homeplace centre both selling for more than $233 million combined.
Investor and developer Colin DeLutis’s DeGroup bought the CS Square shopping centre in Caroline Springs from a Lendlease fund for $136.5 million. The 25,308sqm centre traded on a 6% yield and comprises 3 supermarkets and discount department stores, with a weighted average lease expiry of more than 7 years.
The sale also included CS Commercial, a 1,603sqm complementary mixed-use precinct opposite CS Square, and another 1.28ha of vacant land in 2 separate lots.
Meanwhile, Harvey Norman bought the large format retail centre Watergardens Homeplace in Taylors Lakes from QIC Global Real Estate for $97 million, at a 4.75% yield.
The 25,931sqm centre is on 7ha opposite the Watergardens Town Centre and comprises Bunnings, a Harvey Norman outlet, and 6 national tenants alongside Hungry Jack’s and KFC restaurant pad sites.
Harvey Norman’s $3.1 billion property portfolio equates to about 14% of Australia’s large-format retail property market.
The large-format sector has performed well throughout the past 12 months, as Australians redirected much of their expenses and travelling spend toward their homes.
Next Test Set for Melbourne’s Strip Retail Investment Market
Melbourne’s retail and commercial property market is set for its next test, with the auction of a securely-leased Burke Road, Camberwell asset located in the absolute prime of the famous shopping strip.
Fitzroys agents Chris James and Chris Kombi are marketing 580 Burke Road, Camberwell on behalf of private owners that have held the property since 1977.
The commanding, dual-fronted 344sqm freehold is located in the heart of Burke Road, Camberwell on a 361sqm site with 2 genuine street frontages to both Burke Road and Market Place.
Highly successful national apparel tenant Witchery, part of Country Road Group, has a long lease over the property that returns
$289,230 per annum net. Showing confidence in the location, Witchery extended the lease last year.
Witchery has activated the open plan ground floor retail area to both frontages, providing a clear walk through from Burke Road to Market Place. The frontage to Market Place provides additional activation to the major car park, Camberwell Fresh Food Market and a bustling hospitality precinct.
The first floor is accessed via an internal stair case and comprises staff amenities.
Zoned Commercial 1, the property offers numerous alternative future uses and development outcomes, and its configuration allows for potential to subdivide the premises into 2 tenancies.
Kombi said there have been very few high-quality, well-located properties within Melbourne’s shopping strips offered for sale over the past 12 months.
“The security of bricks and mortar assets has become even more highly sought-after during the COVID period and in the ultra-low interest rate environment.
“Well-located Melbourne retail and commercial property with strong tenancy profiles and long-term leases present among the best examples of these investments.”
James said Melbourne’s shopping strips have demonstrated their resilience over the past 12 months.
“Local neighbourhood strips been the place for Melburnians to reconnect with their local communities - to have a coffee, catch-up with friends, or to break up the day and go shopping, particularly as working from home becomes more widely practiced.”
The property is just metres away from 751-753 Burke Road, home to national retailer Mountfords Shoes on a long-term lease, which Fitzroys sold for $7.55 million in the first auction of a prime Melbourne shopping strip asset in 2021.
“The sale reaffirmed Burke Road, Camberwell’s status as one of Melbourne’s most valuable and best-performing retail and lifestyle precincts,” James said.
Disclosure: The weekly Fitzroys Property Wrap is for information only on transactions in the Melbourne property market. Fitzroys provides this information as a public service. We are not purporting that all sales and leases within this report were transacted by Fitzroys. Terms/Privacy © Copyright 2021 Fitzroys.