Market Plaza Chipping Norton
Real estate services firm JLL negotiates two separate neighbourhood shopping centre sales, as investor interest booms following Australian Covid resurgence. Image – Supplied
  • JLL research reflects an 81% annual increase in value of neighbourhood shopping centre transactions
  • Covid resurgence prompts investor demand, while supply struggles to keep pace
  • JLL recently negotiated sale of two centres, totaling $69M in value and showcasing high demand

Research by global real estate services firm JLL has indicated that neighbourhood shopping centre transactions totalled $2.7 billion in 2021, an annual increase of 81%.

The figure also represents a 45% and 64% growth on the 5 and 10 year averages.

A neighbourhood shopping centre is defined as a small commercial establishment of stores, typically anchored by a supermarket or pharmacy.

Demand outpaces supply

According to JLL’s Retail Investments (Australia) Senior Director, Nick Willis, the convenience and Large Format Retail sectors continue to draw high investor interest and confidence, having outperformed in the past two years.

“The investor interest is broad; ranging from private high-net worth investors, global pension and sovereign funds and the A-REIT’s all looking to increase scale in what is a highly fragmented market.”

Nick Willis, JLL Senior Director

Mr Willis added that supply for this sector of the retail market continues to pose an issue for investors, as supply struggles to keep pace with inflating demand.

“This imbalance will continue to drive yield compression and potential for further M&A and strategic partnerships in 2022,” Mr Willis explained.

Neighbourhood Centres (Average Equivalent Yield)

Neighbourhood shopping centre transactions
Source: JLL Research

Covid resurgence drives interest in shopping centres

The retail asset type was recently thrust into the spotlight by the resurgence of Covid in Australia, which highlighted the vitality of neighbourhood shopping centres.

JLL’s Retail Research (Australia) Senior Director, Andrew Quillfeldt said the current spike in Covid cases is likely to drive a repeat in the retail trends of the past two years, causing spending on grocery and Large Format Retail to surge.

“The strength in underlying sales performance in these two main categories will continue to support investor confidence and demand for neighbourhood and LFR shopping centres.

“Although there is some economic uncertainty in 2022, consumer confidence remains positive and the household sector is in a good position to be supportive of retail spending across all categories,” said Mr Quillfeldt.

Sale of two centres totals $69M

JLL has recently negotiated the sale of two neighbourhood shopping centres for a combined value of over $69 million, showcasing the asset’s popularity among investors.

Coolum Park Shopping Centre, located on the Sunshine Coast, sold in an off-market deal negotiated by JLL Directors Nick Willis and Sam Hatcher for $32.5 million.

The small shopping centre, purchased by property investment firm ISPT, is located at 21 South Coolum Road, Coolum Beach.

Set on a 1.9 hectare lot, the centre is anchored by Woolworths and comprises 11 specialty stores spanning 4404 square meters and 238 car bays.

Furthermore, the JLL team with the inclusion of Director Dylan McEvoy have exchanged contracts in the sale of Market Plaza Chipping Norton.

The retail asset is located south-west of Sydney nearby Liverpool and is in the process of sale to a private investor for $37.4 million and a yield of 4.75%.

The neighbourhood shopping centre was formally campaigned for expressions of interest and is currently fully occupied, anchored by a Coles supermarket.

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