Rundle Mall Adelaide CBD
Adelaide’s Rundle Mall sold in April for 210 million, one of a plethora of retail transactions in the city’s booming retail sector. Image – Canva
  • Retail turnover at an impressive $2.045 billion, encouraging investment in the retail sector
  • High value sales such as Rundle Place and Bunnings Munno Para exhibit soaring buyer confidence
  • Yields fall for large format spaces as prices rise, although High Street yields remain steady

Adelaide’s property market continues to go from strength to strength, with the latest data from m3property showcasing a thriving retail property market.

Earlier this month, reports emerged that Adelaide’s commercial property market was in its best position in 13 years and it seems the city has continued on this trajectory.

High value sales reflect promising market conditions

The city recorded an impressive $2.045 billion in retail turnover ending in September,  increasing buyer confidence in the retail property market.

Nicholas Dreyer, m3property associate director, said investor demand within South Australia’s retail sector remained at high levels throughout this year.

Mr Dreyer added that this year saw some notable retail assets sold, including Rundle Place in Adelaide’s CBD.

Nicholas Dreyer m3property
Nicholas Dreyer, m3property Associate Director. Image – m3property

Rundle Place was acquired by Fortius and Irongate for $210 million earlier this year, changing hands from its previous owner The Blackstone group.

Mr Dreyer said investor demand has also been strong for Large Format Retail Centres with particular interest from private investors, unlisted funds, syndicates and REITs, resulting in yield compression.

Most recently, Bunnings Munno Para was purchased by Charter Hall for $48.8 million, with a market yield of 4.22%.

The 4.11 hectare property is currently occupied by Bunnings with seven years remaining on the lease, with options to remain until 2064.

Yields plummet for large format spaces

“Yields for Large Format Retail assets in South Australia range between 5.50% and 6.75%, with freestanding stores occupied by ASX listed retailers such as Bunnings and Officeworks, transacting at yields significantly lower than the larger multi-tenant centres,” said Mr Dreyer.

He added that consumer demand for household goods was a large driving force behind increased tenant demand for large format space.

Despite yields for large format spaces decreasing dramatically, Mr Dreyer emphasised that yield for retail spaces on High Street have remained fixed between 4.00% and 5.00%.

This is reportedly due to an increased tenant demand in the area, particularly as people adopt flexible working arrangements.

“Net face rental growth for High Street was mixed and varies depending on the location, but they generally range between $500 and $1,000 per square metre.”

Nicholas Dreyer, m3property Associate Director

Casey Robinson, m3property national research specialist, said retail centre owners are adapting their tenancy mix to cater to a growing online retail marketplace.

“The pattern of rationalisation of fashion and growth of health and beauty, services, food-based retailing and entertainment has been a trend over the past five years.

“Following a volatile 24 months, with periods of panic buying as well as household’s
inability to spend on usual leisure and recreational services, household spending is now expected to rebalance over the coming two years,” said Ms Robinson.

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