This article is from the Australian Property Journal archive
THE $54 million off-market sale of HomeCo Ballarat marks a new record for Victorian large format retail (LFR) transactions, as the asset time sees demand surge.
Located at 333 Gillies Street in North Wendouree, just outside of the Ballarat city centre, HomeCo Ballarat is fully leased and comprises 14 specialty stores with 93% tenant weighting to national tenants including Spotlight, Super Cheap Auto, PetBarn, Anaconda, BCF and Fantastic Furniture.
The property also boasts a weighted average lease expiry of 4.0-years.
Tim McIntosh, director of retail middle market at Colliers, managed the off-market transaction on behalf of HomeCo Daily Needs REIT.
“The LFR sector is experiencing an uplift in buyer demand from new buyer groups, including superannuation, syndicate and private capital, with investors drawn to fixed annual review mechanism and robust tenant demand from predominantly national tenants,” said McIntosh.
In 2024 so far, the LFR market has recorded $346 million in transactions across 13 centres for a 70% increase in transaction volume compared to 2023.
The second quarter of 2024 also saw a 47% increase in transaction volumes on the previous year.
“Although consumer spending on household goods have moderated due to cost-of-living pressures, the introduction of Stage 3 Tax cuts and some of the strongest population growth on record is creating a significant tailwind for LFR retailers, where we are seeing tenant demand remains strong,” said Nik Potter, director of Colliers research.
“This is largely attributed to the limited availability of new retail space, which has supported the rental growth observed throughout the year.”
The Colliers Retail Middle Market team alone securing $222 million in LFR transactions across eight centres, for a 63% market share of all transactions YTD.
“The retail market has shown remarkable resilience. The limited supply of high quality investment stock in a sector experiencing increased buyer demand is reflected in the strength of the results achieved nationally,” added McIntosh.
Prior to the Ballarat sale, Victoria has seen strong activity in the LFR sector, including the $11 million-plus Shepparton Retail Hub transaction in February.
Just last week, HMC Capital expanded its HomeCo Last Mile Retail Logistics (LML) Fund, picking up Brandon Park Shopping Centre in Melbourne’s south-east for $107 million from Chris Langford’s Newmark Capital.