This article is from the Australian Property Journal archive
AFTER Queensland accounted for 40% of all retail transactions in 2022, the sector is gearing up for its first major test for the year with a 50% interest in dominant major regional shopping centre on offer.
The only department store within a 345km radius, Stockland Townsville comprises 45,000sqm of net lettable area, anchored by major tenants Myer, Big W and Woolworths.
The asset also includes seven mini-majors and 149 specialties and kiosks, with the recent repurposing of its former H&M into three new mini-majors, including a JD Sports and Cotton On.
While all major tenants expiring post 2031 and specialty tenants with a low occupancy cost of 14.2%.
Nick Willis and Sam Hatcher from JLL have been exclusively appointed to sell the interest via an international expressions of interest campaign, on behalf of an AMP Capital managed fund.
“Stockland Townsville has continued to go from strength to strength and provides investors an opportunity to enter the Major Regional retail sub-sector at a relatively affordable price point without compromising on performance,” said Willis.
“The asset’s recent leasing activity has seen over 70-new leasing deals & renewals completed since January 2021, taking the occupancy of the shopping centre to an exceptionally strong 99.5%.”
Originally opening in 1970, Stockland Townsville underwent a significant $180 million refurbishment campaign in 2012 and includes a further 2.6-hectares of development land across two adjoining lots, leaving plenty of room for future value add opportunities.
“The offering comes as investment into regional centres reaches record low levels off the back of a resurgence in activity in the latter end of 2021. However, investment volumes in 2021 were primarily driven by pent up demand in the prior year,” added Willis.
“Regional transaction volumes have averaged AUD 1.2 billion annually over the past 10 years. In 2022 only one regional centre transacted for AUD 280 million reflective of the tightly held nature of these dominant assets.”
The listing comes as MSCI Real Assets’ Australia Capital Trends report found commercial property transaction activity was down 66% over the fourth quarter, compared to the same quarter in 2021.
With research from The Data App also showing shopping centre sales in three months to November were around 30% of what they were a year earlier, with just under $300 million worth of retail property selling over the period.
Analysis from The Data App also showed a flurry of sub-regional shopping centre sales in the December quarter pushed retail transaction cap rates up to 6.3% and they are likely to go higher in 2023.
Centuria recently snapped up the Margaret River Shopping Centre in WA for $15 million, reflecting an initial passing yield of 6.47%, while major sales closing out the 2022 included Dexus Whole Property Fund completing its sell-down of a trio of sub-regional shopping centres, Deepwater Plaza on the Central Coast selling for $112 million and Hines selling 260 Queen Street in Brisbane for $140 million.
The Stockland Townsville shopping centre sits just 5km from the Townsville Airport and benefits from strategic main road positioning enabling high accessibility and exposure to passing trade.
“Townsville has continued to evolve and gentrify over recent years, with the fundamentals of the region increasingly strengthening. Unemployment is at a recent all-time low of just 3.0%, down from 8.0% in December 2019,” said Hatcher.
“Further, the total gross regional product of the region ($13.0bn) now surpasses that of other major capital cities of Hobart ($8.3bn) and Darwin ($9.6bn). This economic positivity is driving increased consumer spending into assets such as Stockland Townsville, supporting the investment underwrite for the opportunity.”
The international expressions of interest campaign for Stockland Townsville is set to close 1 March 2023.