Neighbourhood centres lead in tough environment Local retail holds value
QUEENSLAND neighbourhood shopping centres remain the star performer in one of the toughest retail environments for years.
CBRE’s latest Neighbourhood Watch research paper confirmed that in a year where asset sales have plummetted, those with non-discretionary focused retailing such neighbourhood centres have outperformed the larger subregional and regional shopping centres.
Authored by CBRE Australia Research associate director Ally McDade and state directors Joe Tynan the report said: “Most of the COVID-19 related decline in retail spend was felt in April, when restrictions were at their most extreme across the country.”
“Restrictions eased quickly in Queensland, and a wave of fiscal stimulus measures such as JobKeeper, JobSeeker, tax returns and early access to superannuation have boosted confidence. “As a result, retail spend has rebounded strongly in Queensland, up 7.7 per cent over the year to August 20. However, this positive result has not been uniform across retail categories.”
The success of smaller shopping centres has been confirmed with Primewest and HomeCo’s launch of their “Daily Needs” funds targeting neighbourhood centres.
In the latest deal sources Mr Tynan and Mr Hedger sold the Coomera City Centre for $57m to HomeCo Daily Needs REIT. They refused to comment but it is believed the yield was around 5.75 per cent.
The report found that Queensland neighbourhood centres experiencing minor cap rate or yield softening to 6.58 per cent while subregional centres softened by 15 basis points to an average of 6.73 per cent. Regional centres were the worst affected, softening by 22 basis points to 5.70 per cent. Book values also fell with neighbourhood centres recording a 1.6 per cent decline while subregional centres and regional centres fell respectively 2.4 per cent and 4 per cent.
In the year to-date only two subregional centres have sold while neighbourhood centres recorded $137m settled transactions across seven assets.