This article is from the Australian Property Journal archive
A NEW large format retail asset in Melbourne’s northern growth corridor is up for grabs, as the sub sector remains resilient in the face of economic disruptions.
The prime 30,000sqm Craigieburn Junction Large Format Lifestyle Centre occupies a 6.13-hectare freehold site on the corner of Craigieburn Road and Aitken Boulevard and was developed in 2019 by PGIM Real Estate.
Nick Willis and Sam Hatcher from JLL, along with Justin Dowers and Philip Gartland of Stonebridge Property Group were appointed to manage the on-market sale of the asset via an expressions of interest campaign.
“In addition to the recent strong tenant sales performance, investors are attracted to the underlying land component of LFR sites in metro locations which underpins long term re-development potential,” added Hatcher.
The diverse mix of tenants at the centre currently include Nick Scali, Supercheap Auto, Freedom, Caltex, Hungry Jacks, a medical centre, a childcare centre and supermarket.
“Large format retail assets have witnessed a resurgence in the past 18 months, both from a retailer performance and investment demand perspective,” said Dowers.
This has been particularly apparent in mixed-use retail assets, with anchor tenants including supermarkets and medical and childcare services.
“Demand for the sector continues to grow as investors have recognised not only the strong outperformance of the assets, but their tightly held nature and compelling proposition on a returns basis when compared to prime assets in other sectors,” said Willis.
Earlier this month HomeCo’s Daily Needs REIT boosted in portfolio with $160 million in acquisitions, 22% of which were large format retail purchases, after attributing a 6.5% portfolio value uplift to its exposure to the sub sector.
“Strong thematic tailwinds have supported a resurgence in sales performance in key LFR categories. ‘Working from home’ and the absence of international travel has had a major impact on people upgrading their homes. The retained travel spending also provides additional budget capacity for retail spending which has flowed through to a number of categories,” said Andrew Quillfeldt, senior director of retail research at JLL.
At the beginning of the year, large format retail outlets have been the main beneficiaries of heightened retail spending as supported by government support measures, with customer spending becoming more focused on household goods, reflecting a 17.% increase in sales over 2020.
“Stimulus measures including the ‘HomeBuilder’ incentive scheme are also continuing to support the LFR sector through housing construction and renovation activity. The ability to trade during lockdown restrictions reinforces the resilience of the LFR sub-sector,” added Quillfeldt.
According to JLL the investment activity in the LFR sub sector increased by 79% for the first half of the year, compared to the same period in 2020.
The international expressions of interest campaign is scheduled to close on 12 August 2021.
