This article is from the Australian Property Journal archive
DEXUS has turned a tidy profit from its ownership of a large format retail centre in Sydney’s west, selling Homemaker Prospect for $78.9 million to investment house AsheMorgan.
Prospect Homemaker is a 26,000 sqm centre that has 28 showrooms occupied by brands including Fantastic Furniture, The Good Guys, Snooze, Beacon Lighting and Bing Lee.
Dexus had bought the asset $64.2 million three years ago with plans to convert the 6.55-hectare site to industrial use.
JLL’s Nick Willis and Sam Hatcher sold the asset on behalf of Dexus.
AsheMorgan is experienced in the sector and sold Sydney’s Crossroads Homemaker Centre in October to LaSalle Investment Management for $282 million. The deal was also handled by Willis and Hatcher and represented more than double the $140 million paid for the centre in 2018.
Of the five largest retail transactions completed in Australia to date in 2022, three have been large format retail assets. As well as Crossroads Homemaker, they include Homeworld Helensvale for $265 million to interests associated with the Shayher Group, linked to Taiwanese developer the Par Jar Group, while Goodman picked up the Alexandria Homemaker centre for last mile conversion.
The sale of Prospect Homemaker takes the total large format sales volume for 2022 to a five-year high, which Willis said reflects the intensified demand for large format assets because of the category’s resilience over the past two years.
JLL has transacted over $750 million worth of large format retail assets in 2022.
“Through this, we have seen a structural shift in the investor base attracted to both the sub-sector’s investment fundamentals, as well as also considering their alternative use potential,” Willis said.
The large format retail sub-sector recorded the most significant yield compression across all retail sub-sectors in 2020 and 2021 with yields tightening by 105 basis points between the end of 2019 and the final quarter of 2021.
Pandemic-induced lock downs and travel bans were a significant tailwind for the sector as household goods spending remains elevated at 31% above pre-pandemic levels, according to JLL research. Strong renovation activity and a sharp increase in demand for home office furniture and equipment has driven spending.
JLL’s head of capital markets research, Andrew Quillfeldt said household said consumers spent almost $1.4 billion more a month than pre-pandemic.
Leasing demand has remained robust as a result. Major large format retailers have continued been optimistic with NCK expecting to open a minimum of six new stores nationally in FY23 in the form of two Nick Scali stores and four Plush stores.
