Australian Shopping Centre Investment Review & Outlook 2018 - April 2018 - JLL
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April 2018 Australian Shopping Centre Investment Review & Outlook 2018
Snapshot Buyer profile
3%
Superannuation
12%
Other
Funds
34%
Unlisted Funds
2017 national retail transactions breakdown by state
SA
CT 2017 16%
Offshore
Investors
A
WA 2%
3 % /GIC
4 13 %
VCX
Rest of
%
am
ockingh
4% 14%
21%
R
Private Investors
e Hub AREITs Source: JLL Research
Hom
Q LD 5% Transactions by sub-category
f
o
20
WA
t
8% 12% 14% 19% 23% 23%
Res
%
$8.8
NSW
Large Format
CBD Sub-regional Other Regional Neighbourhood
Retail
QLD
22
Source: JLL Research
billion
% Key Retail Drivers
Population growth
1.3%
SW
Globally, second highest for an advanced economy
VIC (10yr forecast p.a.)
N
op
illy
R e st o f Business investment
(p.a. as at Dec-17) 7.4% A precursor to wage growth
9%
Ind ro
oo
Labour market growth
(p.a. as at Feb-18) 3.5% Double the 10-year average
C
VI
8% 2.6%
10%
Wages
nt
Recovery from 2.1% p.a. avg 3-yrs to 2017
Rest of
(3yr forecast p.a.)
oi
Hig hp
Source: JLL Research Tourist arrivals
(3yr forecast p.a.) 6.6% Remains a supportive driver
Source: JLL Research, ABS,Deloitte Access Economics, Oxford Economics
2 I JLL Shopping Centre Investment Review & Outlook 2018 I 3
Table of contents Executive summary
05 Executive summary Retail investment activity in 2017 was the second highest on Experienced and active asset management will be key to
record at $8.8 billion. We expect 2018 to be another strong year, delivering outperformance in the competitive retail landscape.
06 2017 in review with a number of major transactions already in the pipeline. Those at the forefront of retail innovation, which are
Investors have mixed views on the outlook for the retail sector, introducing new concepts and retail experiences to boost the
08 Capital sources which has stimulated near-record levels of asset trading. The attractiveness of shopping centres to customers, will be well-
changing retail environment is driving transaction activity as positioned to gain market share in a low-growth environment.
12 Around the country owners refine their portfolios, adjust their exposure to different Owners will also be seeking to capitalise on the growing
states and asset types and seek greater diversification to population density within major capital cities and exploit
16 Divergence improve their long-term risk-return profile. mixed-use development opportunities to utilise surplus land or
re-purposing existing space.
18 Pricing Polarisation within the retail sector is a global phenomenon.
A widening variance between the performance of individual Retail investments can continue to deliver attractive returns for
21 Discount rates trending down retailers and prime and secondary grade retail assets in prime assets with the right tenant mix for the trade area and
Australia has resulted in buyers becoming increasingly for assets in growing catchments. However, asset selection
22 Macro outlook will be more important moving forward given the increasingly
selective and cautious towards underlying asset performance.
26 Re-leasing spreads We see this coming to the forefront of investor considerations diverse underlying performance. Investors continue to seek
in 2018, given record-low yields and the increasing reliance on opportunities in the retail sector to add value and drive
30 Amazon and the e-commerce trend income growth as a driver of returns. enhanced returns. Opportunities for high-yield investors will
emerge, particularly in the sub-regional shopping centre sector.
32 Quantifying the benefit of tenant mix changes Technology has radically improved price transparency for
consumers, increasing market efficiency and reducing long- Owners have been undertaking strategic portfolio restructuring
34 Department stores term profitability for retailers. Despite an overestimated initial in the last few years to reposition their businesses for growth.
launch, Amazon’s recent entrance into Australia will likley While many of the strategic manoeuvres are now largely in
36 Outlook accelerate this trend over time, by increasing competition and place, for most groups, we still see a need for ongoing tactical
putting further downward pressure on retail prices. adjustments to retail portfolios (sales and acquisitions) in order
to maximise portfolio returns.
Figure 1: Transactions by sub-category
$10
$9
$8
$7
AUD Billions
$6
$5
$4
$3
$2
$1
$0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Regional Sub-regional Neighbourhood CBD Large Format Retail Other
Source: JLL Research
4 I JLL Shopping Centre Investment Review & Outlook 2018 I 5
2017 in revеw Figure 2: Transactions by price cohort
– A year boosted by major transactions $3.5
$3.0
$2.5
Retail transactions reached $8.8 billion in 2017 – the second 4. Home Hub Castle Hill and Home Hub Marsden Park for
AUD Billions
highest annual figure on record – which was a surprisingly $436 million – the biggest Large Format Retail sale on $2.0
strong result following very light volume in the first half of the record; and
year. Volume was just $2.4 billion in 1H17, with over $6.4 billion
5. A 50% share in Rockingham Shopping Centre in WA for
transacting in 2H17. $1.5
approximately $305 million.
The five largest transactions accounted for approximately 40% These five major transactions, all above $300 million, totalled
$1.0
of the 2017 total volume. Four of which occurred in the second $3.3 billion. This is the highest volume of transactions above
half of the year. These include: $300 million on record, having increased significantly from the
last few years in value terms. While each transaction had its $0.5
1. Vicinity Centres/GIC asset swap for $1.1 billion – the own unique set of circumstances, owners are taking advantage
largest transaction of 2017; of market liquidity to undertake major asset transactions.
$0
There continues to be a strong trend towards strategic joint
2. A 50% share in Indooroopilly Shopping Centre in Brisbane $5-$25 million $25-$50 million $50-$150 million $150-$300 million >$300 million
ventures as investors seek liquid part-share investments in
for approximately $800 million – the biggest retail single-
high-quality assets. Investors have been primarily reducing
asset sale on record; 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
exposure to large individual assets (from 100% share) to
3. A 25% share in Highpoint Shopping Centre in Melbourne increase portfolio diversification. Some of the key examples of
for $680 million; major joint venture deals include: the Vicinity Centres/GIC asset Source: JLL
swap, Indooroopilly Shopping Centre, Rockingham Shopping
Centre, MLC Centre and Wynyard Place.
Indooroopilly Shopping Centre, QLD (50%)
Transacted by JLL with co-agent on behalf of Commonwealth
Superannuation Corporation (CSC) to AMP Capital Shopping
Centre Fund (ASCF) / AMP Capital Diversified Property Fund
(ADPF) for over $800.0 million
6 I JLL Shopping Centre Investment Review & Outlook 2018 I 7
Capital sources
– Unlisted funds were the dominant source of capital in 2017
Investors were clearly very active on both the buy and sell AREITs were net buyers in 2017, after having been a net seller accounting for 16% of total sales in 2017. While there continues been most impacted by the change to-date, particularly for
side in 2017, given the near-record level of activity. Unlisted of assets in the five years prior. Vicinity Centres REIT was a net to be significant demand from overseas institutional investors assets with vacancy risk or high levels of competition and/
funds dominated acquisitions, but AREITs were also active, buyer (of just $16.3 million), but was a net seller as a Group for Australian retail assets, the focus is on prime quality core or new supply. While access to debt has become somewhat
albeit on both sides of transactions, as net buyers of $500 (including asset sales by Vicinity-managed unlisted funds). and core-plus opportunities. Although direct acquisitions by harder, demand from private investors has remained firm.
million in 2017. Vicinity Centres, Charter Hall and Aventus accounted for 84% of offshore investors declined, offshore investors contributed Some buyers have been using equity to acquire assets, with the
acquisitions by AREITs in 2017 (excluding the retail component strongly to activity by investing indirectly into domestically- view to borrow against the property post-acquisition.
Unlisted funds were the biggest buyer group in 2017 by a of MLC Centre acquired by Dexus). SCA Property Group and managed wholesale funds.
significant margin, acquiring $3.0 billion or 34% of total Mirvac Group also acquired assets in 2017, although less than The ‘other’ owner category primarily includes corporates
transactions. AMP Capital and GPT accounted for over in previous years (by value). SCA Property Group purchased Private investors are still very active in terms of new (Woolworths and Wesfarmers), developers and syndicates.
three quarters of the activity (73%), with a range of major two Gold Coast assets, Mudgeeraba Market and Worongary acquisitions and divestments. However, banks have tightened Woolworths and Wesfarmers (including Coles Group and
investments, including a 50% share in Indooroopilly Shopping Town Centre, as well as Sugarworld Shopping Centre in Cairns. lending to this buyer cohort to some extent. Loan-to-value Bunnings) have been a major source of investment product
Centre for approximately $800 million (ASCF/ADPF), a 25% Mirvac acquired the remaining 50.1% share in East Village, ratios have decreased to approximately 50-55% from 60-65% in the retail sector over the last decade, particularly with the
share in Highpoint Shopping Centre for $680 million (GWSCF) Zetland for $155.3 million and the 50% share in the proposed previously. Banks have also become much more selective development and sale of supermarkets, neighbourhood
and a 50% share in Rockingham Shopping Centre for South Village Shopping Centre. about who they lend to and the characteristics of the centres and hardware warehouses. Combined, the two groups
approximately $305 million (ASCF). underlying asset. We see this potentially impacting yields in have sold approximately $3.7 billion worth of direct real estate
Offshore investors accounted for a much smaller proportion the neighbourhood shopping centre market given the high over the last ten years.
AMP Capital was the biggest buyer of retail assets in 2017, of transaction activity in 2017 than the previous year. participation rate of private investors. Private investors have
acquiring approximately $1.5 billion (excluding Gasworks Acquisitions by offshore investors declined to $1.4 billion in
Plaza). However, Vicinity Centres was the most active group 2017, from $2.5 billion in 2016. Despite the 46% decrease in
over the course of the year, completing approximately $1.9 offshore investment in 2017, volumes were in line with the
billion in transactions (including divestments and acquisitions). 10-year average in percentage terms, with offshore investors
Figure 3: Buyer profile Rockingham Shopping Centre, WA (50%)
Transacted by JLL on behalf of Vicinity Retail Partnership
(VRP) to AMP Capital Shopping Centre Fund (ASCF)
2016 2017 $305.0 million
8% 12% 12%
7% Other Unlisted Funds
3% Other
Superannuation
Superannuation
Funds
Funds
34%
Unlisted Funds
17%
AREITs
Offshore
Invсtors 16%
Offshore
Invсtors 34%
22% 14%
Private Investors
Private Investors 21%
AREITs
Source: JLL Research
8 I JLL Shopping Centre Investment Review & Outlook 2018 I 9
Figure 4: Net buyer analysis
MLC Centre, NSW (50%) - office
and retail complex $2.0
Transacted by JLL with co-agent on behalf of QIC
AUD Billions
to Dexus for $722.5 million $1.5
$1.0
$0.5
$0.0
-$0.5
-$1.0
-$1.5
-$2.0 Unlisted Funds AREITs Private Offshore Superannuation Other
Investors Investors Funds
Source: JLL Research
2013
2014
2015
2016
2017
Artist’s impression
Figure 5: Annual retail transactions (divestments) by Woolworths and Wesfarmers
The Station Oxley, QLD
Transacted by JLL on behalf of Folkestone to Savills $900
Investment Management for $43.5 million
$800
$700
AUD Millions
$600
$500
$400
$300
$200
$100
$0
Wesfarmers Woolworths
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Source: JLL Research
10 I JLL Shopping Centre Investment Review & Outlook 2018 I 11
Around the country
– Record volumes reached in New South Wales and Queensland in 2017
New South Wales Figure 6: 2017 national CT
SA
Victoria
A
retail transactions
WA 2
New South Wales recorded $3.4 billion of retail Victoria recorded a decline in investment activity to $1.5
%
transactions in 2017, the highest figure ever recorded breakdown by state
3% /GIC billion in 2017 from $1.9 billion in 2016, despite the sale
4% 13 %
VCX
Rest of
for the state. However, the top two transactions of a 25% share in Highpoint Shopping Centre for $680
accounted for nearly half (46%) of the total (by value). million in July 2017. However, the lack of transactions is
The largest of which was the asset swap between GIC am not reflective of investor sentiment in the state. Victorian
ockingh
4%
and Vicinity Centres for approximately $1.1 billion – all retail assets are typically tightly held, particularly
four assets in the transaction are located in Sydney. by private investors, given their scarcity relative to
The sale of Home Hub Castle Hill and Home Hub R other states. Shopping centres in Victoria are highly
Marsden Park for $436 million also boosted the states sought after at present because of the very high rate
volume in 2017. e Hub of population growth relative to other states (2.3% as
Hom
5%
at June 2017). The high rate of growth provides a solid
LD
Queensland baseline for future retail turnover growth. Investors will
Queensland remains a very liquid market and
continues to receive a disproportionate share f
Q be aiming to capitalise on the fast population growth by
seeking assets that are positioned in close proximity to
of activity. The attractive yield spread between o clusters of residential development.
WA
20
t
Res
Sydney/Melbourne and S.E Queensland has
resulted in investors seeking opportunities in the
Queensland retail market in the last few years. In
% Western Australia
NSW
the neighbourhood sub-sector for example, the S.E Western Australia is gaining renewed investor
Queensland to Sydney yield spread has been around interest, with a growing view that market conditions
30 bps historically (10-year average). At its widest, have bottomed and an economic rebound will be
QLD
it was 125 bps in 3Q16. Even though the spread supportive of retail spending over the medium term.
22
has narrowed (to 75 bps at 4Q17), it remains wide Investors with a long-term investment horizon will
%
by historical standards. A very similar trend exists be actively seeking opportunities in Perth for relative
between S.E Queensland and Victoria. value, as opportunities arise. However, Perth has a
number of major development projects in the pipeline
Queensland is also attracting investor interest between now and 2020. This predominantly includes
because of the greater availability of investment
SW
extensions to regional shopping centres, which may
opportunities relative to other states. The relatively
larger proportion of syndicates and private
VIC increase competition in the leasing market if they
N
progress as planned. Transaction volume was $633.4
developers in Queensland enables greater liquidity. million in 2017 and has been relatively stable at around
Furthermore, Queensland has a larger asset base
due to the state’s size and dispersion, with many
R e st o f $600 million per annum (p.a.) since 2013.
illy
sub-cities, including the Gold Coast, Sunshine op
Ind ro
9%
Coast and Townsville. This larger pool of investment South Australia
oo
opportunity is contributing to the higher transaction
volume. Queensland has approximately 34% more South Australia has had no transactions above $50
shopping centres (by number) than Victoria, and million in the last two years. This is largely driven by a
C shortage of stock rather than subdued investor demand.
VI
only 18% less than New South Wales. Queensland is
8%
the second largest market by number of assets and While South Australia is forecast to have a low rate of
10%
total floor area, despite being the third largest state population growth, underpinning consumer demand
nt
Rest of
by population and having the third largest share of over a longer time horizon, retail turnover growth has
oi
been relatively strong over the last few years, with 3.8%
national economic output. Hig hp Source: JLL Research p.a. for 2017. Higher yields relative to other states are
likely to be attractive to a range of buyers in the low-yield
environment, despite the lower growth profile over the
long-term.
12 I JLL Shopping Centre Investment Review & Outlook 2018 I 13
Wynyard Place, NSW (49.9%)
Figure 7: Neighbourhood yield spread – South East Queensland to Sydney/Melbourne - office and retail complex
Transacted by JLL on behalf of Brookfield Property
150 Partners to AMP Capital Wholesale Office Fund
(AWOF) & Uni Super for approximately $953.0 million
125
Basis Points
100
75
50
25
0
Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 10-Yr Hist
Avg
S.E. Qld - Sydney S. E. Qld - Melbourne
Source: JLL Research
Figure 8: Transactions by state – last five years
$3.5
$3.0
$2.5
AUD Billions
$2.0
$1.5
$1.0
$0.5
$0.0
NSW VIC QLD WA SA ACT
2013
2014
2015
2016
2017
Source: JLL Research
14 I JLL Artist’s impression Shopping Centre Investment Review & Outlook 2018 I 15
Diverгnce Queen Victoria Building, NSW (50%)
Sold as part of the Vicinity Centres / GIC asset swap
– How to position in a divergent sector for $301.2 million
Divergence between high and low quality assets is a major Shopping centres will need to be more intensively managed
theme in retail, in Australia and globally. The changing retail in the changing retail environment to preserve and drive asset
environment is creating risks and opportunities, which is value. Owners with specialised retail management expertise
encouraging transaction activity – as varying opinions towards will have a competitive advantage in this regard. This has
the outlook for retail market conditions, combined with varying been a major driver of the co-investment trend as investors
thresholds for risk tolerance, influence investment decisions. seek joint ventures with high quality managers. A more active
There is a significant cohort of the investment community that approach to portfolio management will be required to reduce
believes physical retail can continue to thrive with the right exposure to underperforming assets and re-weight their
tenant mix, solid catchment demographics and initiatives portfolio towards better quality retail assets.
tailored to consumer trends for the next generation.
More challenging trading and leasing conditions will see
The retail sector is going through a period of adjustment as demand for secondary grade retail assets ease across all
retailers continue to revise their business models to reflect sub-sectors. The wide variation in individual retailer and asset
the globalisation of retail, changes in technology, changing performance is now well-understood by owners and investors.
preferences and trends between generations. Shopping Investors are beginning to price assets accordingly. Asset
centre owners are acutely aware of the changes in the retail selection will be even more important in the next few years.
industry and the impact that it is having on retailer decision-
making. Centre owners are taking a proactive approach to
retailer engagement strategies to ensure occupancy rates are
maintained.
The Galeries, NSW (50%)
Sold as part of the Vicinity Centres / GIC asset swap
for $143.1 million
16 I JLL Shopping Centre Investment Review & Outlook 2018 I 17
Pricing
– Yields are starting to adjust Figure 10: Regional yield spread to 10-year inflation-indexed Government bond rate profile
The divergence theme is starting to be reflected in pricing. The Investor risk appetite faded through 2017 and demand for
first signs of yield decompression in this cycle have emerged. secondary assets softened. Book values and yields for non-
We recorded softening at the lower end of the yield range in core assets were being held at a level which was unsustainable
600
4Q17, yet continued to record further compression at the upper relative to purchaser demand for that type of product and the
end of the yield range for prime assets in certain sub-sectors. risks associated with that asset class. A number of assets were
We expect this trend to extend to other markets across multiple offered for sale but withdrawn as the vendor/buyer price- 550
sub-sectors from early 2018. expectation gap widened.
500
There continues to be robust demand for prime assets We have analysed yields for approximately 120 sub-regional
Basis points
primarily from domestic unlisted funds and offshore investors. shopping centres over the last 11 years to assess the yield 450
These investors are attracted to prime assets for their ability profile at different points in time. The dispersion of yields
to retain tenants, grow market share within their catchments, (around the average) was lower in 2017 than in the previous 400
and ultimately, deliver attractive returns for investors. We market upturn in 2007. In 2007, the overall yield range was
expect competition for prime retail assets to remain strong, between 5.50%-7.75%, although yields for individual assets 350
with yields for core assets in most retail sub-sectors likely were highly concentrated within a very narrow range. Of
to stabilise at their current levels, at least through 2018 and these assets, 83% were within 6.00%-6.75% (75 basis points). 300
potentially extending into 2019. Positive returns are likely to However, in 2017, the overall range was not only wider
be disproportionately skewed towards quality assets. Quality (at 5.25%-8.00%), but properties were also more evenly 250
assets are generally those with strong demographics and/or distributed within the range this time around, with 83% of the
a growing trade area, inner-urban and metropolitan-located assets spread out across 150 bps (5.50%-7.00%). 200
assets or assets that dominate their catchment.
Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13 Dec-15 Dec-17
Spread Historical benchmark Spread post reversion in real bond rate to 2%
Source: RBA, JLL Research
Figure 9: Sub-regional shopping centre yield profile
30 The flatter yield profile is evidence of investors being more There is likely to be a gradual process of adjustment in capital
discriminating towards pricing for individual assets and is markets as central banks globally move into a tightening
cycle. If the inflation-indexed Australian 10-year government
Number of Properties
25 reflective of the divergence in the performance of underlying
assets. The sub-regional vacancy rate, for example, was 1.8% bond rate were to continue to rise from 1.1% in February
in December 2007 compared with 3.2% in December 2017. 2017 to 2.00%, but remained below the historical average
20 of 2.75%, the spread across each retail sub-sector would
Owners and investors may adopt a more defensive retail narrow to unsustainably low levels. In this scenario, the spread
15 strategy in 2018 given the competitive retail environment would be well below the historical benchmark and would
and subdued outlook for income growth. Our view is that be approximately in line with 2007 levels. Assuming a rise
10 average yields will likely soften across all real estate sectors in the real bond rate to 2.00%, the spread for regional, sub-
as long-term interest rates begin to move higher from the regional and large format retail shopping centres would each
5 exceptionally low current levels. The risk premium for retail be approximately 75 bps below their historical benchmark.
assets (spread between property yield and the inflation- Neighbourhood yields would be 136 bps below the historical
indexed 10-year government bond rate, i.e. risk-free rate) is benchmark and CBD retail would be 95 bps below. We reiterate
0 that core shopping centre yields within each category are likely
5.00 5.25 5.50 5.75 6.00 6.25 6.50 6.75 7.00 7.25 7.50 7.75 8.00 8.25 8.50 8.75 9.00 9.50 10.00 10.25 currently slightly above the historical benchmark across all
of the retail sub-sectors (except neighbourhood shopping to remain resilient given the increased investor demand for
Yield % centres), suggesting that retail assets are still attractively quality assets.
2007 2009 2013 2017 priced. We adopt the ten years to 2011 as the historical
benchmark, reflecting the period before exceptionally low
Source: JLL Research interest rates.
18 I JLL Shopping Centre Investment Review & Outlook 2018 I 19Discount ratс trending down
Discount rates for all commercial property sectors have discount rates over time. Figure 12 shows the spread between
compressed significantly since 2013, by approximately 181 the discount rate and capitalisation rate.
basis points, reflecting the adjustment in return expectations
“ The retail investment market has moved to a two-tier and the low-growth environment (Figure 11). The “lower- Super and major-regional centres have seen the greatest
for-longer” thesis has driven a structural shift towards lower downward revision in the capital growth component across the
position where yields for high quality retail assets have capitalisation rates and lower income growth for property real estate sectors. However, in absolute terms, this sub-sector
shown further compression over the past 12 months, over the long term. The combination of these adjustments has
resulted in a reduction in the capital growth component of
is still expected to have the highest annual capital growth on a
long-term view across retail, office and industrial.
particularly in the regional shopping centre sector, while
weaker performing retail properties are being priced at Figure 11: Average discount rate by real estate sector and sub-sector
discounts. Equally, discount rates for the better quality retail 10.50 % p.a.
assets have compressed as return expectations shift lower. 10.00
There appears potential for further yield softening for non- 9.50
core assets, coinciding with an increase in stock (supply) as 9.00
owners seek to rebalance portfolios. Interestingly, average 8.50
neighbourhood shopping centre yields tightened in 2018 and 8.00
7.50
are now below sub-regional centre yields for the first time on
7.00
record, reflecting a re-rating of the relative risk profile of the
6.50
two asset classes. The subdued sales performance of discount 2007 2009 2011 2013 2015 2017 2007 2009 2011 2013 2015 2017
department stores and greater weighting of apparel stores Super and Major-regional Neighbourhood Industrial Warehouse Office - Non-CBD
(and increased activity of digital disruptors) has weighed on Regional Large Format Retail Industrial Distribution Centre Office - CBD
Sub-regional
the sub-regional sector, while non-discretionary supermarket-
Source: MSCI, JLL Research
anchored centres have performed well. ”
Figure 12: Growth expectations – spread between discount rate and capitalisation rate
John Burdekin 3.0
2.5
% p.a.
Head of Retail Valuations & Advisory, 2.0
Australia 1.5
1.0
0.5
0.0
-0.5
-1.0
Super and Regional Sub-regional CBD Office Non-CBD Neighbourhood Industrial Industrial
Major-regional Office Distribution Warehouse
Centre
10-Year Average Dec-17 Spread
Source: MSCI, JLL Research
20 I JLL Shopping Centre Investment Review & Outlook 2018 I 21Macro outlook
– Wages will be the catalyst for stronger leasing market conditions Figure 14: Business investment
The Australian economy is in relatively good shape moving household debt – from 161% of annual household disposable
into 2018. The labour market is strong, business investment income in December 2012 to 188% in September 2017. 15.0%
is picking up and the risks to retail spending posed by the However, the household debt-to-assets ratio has fallen slightly
housing market have subsided to some extent. since 2013, suggesting that the risks to retail spending are not
necessarily driving pressure on household balance sheets, but 10.0%
Nevertheless, the housing market still presents a persistent, on household budgets.
albeit more subdued, risk to the outlook for retail spending
growth. The Australian Prudential Regulation Authority (APRA) The impact of policies implemented by APRA has already
moved swiftly to ensure financial stability in the economy by raised mortgage rates for some borrowers, primarily for 5.0%
reducing risks in the housing market. Subsequent changes interest-only owner-occupier loans and investment loans.
in lending criteria by the major banks helped to manage The average variable mortgage rate for owner-occupiers has
an orderly slowdown in house price growth. Such changes remained stable but for investor loans has increased by 30
have had the effect of reducing the risk of a more substantial basis points since November 2016. The official cash rate has 0.0%
contraction in house prices by shortening the cycle, tempering been unchanged at 1.5% since August 2016, but financial
investor demand and reducing potential for oversupply. As markets are pricing in a 100% chance of a 25 basis point
a result, there is less chance of an imminent drag on retail increase in the official cash rate by April 2019 and a 50%
spending growth from a reduction in household wealth and chance of a further 25 basis point rate rise by July 2019 (as at -5.0%
consumer confidence. February 2018).
Growth in household debt poses some risk to the outlook for
-10.0%
the retail sector, should interest rates begin to rise. The rise
in house prices since 2012 has meant substantial growth in
-15.0%
Dec-2013 Dec-2014 Dec-2015 Dec-2016 Dec-2017
Figure 13: Labour market conditions
Private Business Investment (annual %)
6.6% 4.0% Source: ABS, JLL Research
6.4% 3.5%
6.2%
3.0% In terms of the medium and long-term outlook for the macro We see the recovery in wage growth as an important driver
6.0% retail environment, the ingredients are there for a recovery in of a recovery in retail spending growth. While the growth in
2.5% retail spending. Private sector wage growth has been subdued the number of people employed (+403,000 people in 2017) is
for some time now (1.9% p.a. as at December 2017), but some certainly supportive of retail spending, a broad-based recovery
5.8%
of the lead indicators of wage growth point to a recovery. in wage growth impacts a much wider group of consumers –
2.0%
Employment growth is strong, the unemployment rate has the 12.4 million people in the Australian labour force.
5.6% been trending down and business investment has begun to
1.5% recover. In terms of the outlook for Australian economic growth, the
5.4% RBA forecasts above-trend GDP growth of 3.25% p.a. in 2018
Employment growth accelerated in 2017 and grew at 3.3% and 2019. The recovery is expected to be driven by non-mining
1.0%
5.2% p.a. in December 2017, more than double the 10-year annual business investment, tight labour market conditions and an
average of 1.6%. The unemployment rate has been trending accommodative interest rate environment. While there are
5.0% 0.5% down since 2014 to 5.5%, as at December 2017. Business some risks to the outlook for retail turnover growth, the overall
investment is typically a precursor to employment, which macro-economic backdrop is supportive of a recovery.
will begin to absorb some of the spare capacity in the labour
4.8% 0.0%
market, and is likely to stimulate a rebound in wage growth in
Dec-2013 Dec-2014 Dec-2015 Dec-2016 Dec-2017 the short to medium-term.
Unemployment rate [LHS] Employment growth [RHS]
Source: ABS, JLL Research
22 I JLL Shopping Centre Investment Review & Outlook 2018 I 23Figure 15: Wage growth (private sector)
5.0%
4.5%
4.0%
3.5%
3.0%
p.a
2.5%
2.0%
1.5%
“ The Reserve Bank of Australia is
1.0%
confident that the domestic economy
0.5%
is heading back towards trend growth
0.0% in 2018 (3.0%) with an acceleration
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
in GDP growth to 3.25% in 2019.
Source: ABS, JLL Research
A return to trend growth will be
accompanied by a tightening in
monetary policy and an increase in
standard variable mortgage rates.
While an increase in mortgage rates
Chatswood Chase, NSW (49%) will negatively impact disposable
Sold as part of the Vicinity Centres / GIC asset income, only 34.5% of Australian
swap for $562.3 million
households have a mortgage with the
balance of households owning a house
outright (31.0%) or renting (30.9%).”
Andrew
Ballantyne
Head of Research, Australia
24 I JLL Shopping Centre Investment Review & Outlook 2018 I 25Re-leasing spreads Figure 17: Implied re-leasing spread (specialty stores)
1.7%
1.5%
– Likely to turn negative, but still delivers growth 0.8%
Our view is that re-leasing spreads for specialty stores will be the last few years. The difference is likely reflective of - 0.5%
- 0.6%
under pressure in 2018 (-0.5%) as a result of the downward the upgrade in REIT portfolio quality through the sale of
trend in retail sales growth, and will remain negative to 2020 non-core assets, the acquisition of better quality assets
(-3.5%). Total retail turnover growth for specialty stores was and the impact of development programs and/or asset - 2.2%
approximately 3.0% p.a. as at December 2017, compared enhancement and tenant mix initiatives. Our estimates
with annual passing rent increases of approximately 3.2% for re-leasing spreads are based on a very mild recovery - 3.5%
p.a. at present (CPI+1.25%). However, net income growth for in specialty retail turnover growth from 3.0% p.a. as at - 4.0%
- 4.4%
specialty stores is likely to remain positive at 2.5% in 2018, December 2017 to 3.5% p.a. in 2020, although remaining
2.2% in 2019 and 1.9% in 2020 (factoring in annual rent below the 10-year average of 3.7% p.a.
increases and re-leasing spreads for expiring leases).
Occupancy cost ratios broadly stabilised in the last few
It is important to note that a negative re-leasing spread of years. A reset in rents will be necessary to avoid upward - 7.3%
- 7.5%
-3.5% at lease expiry in 2020 still implies cumulative rent pressure on occupancy cost ratios. We believe that retailers
growth of 13.5% over five years, which equates to 2.6% p.a. will continue to seek more sustainable occupancy cost
ratios at lease expiry, given cash flow pressures in terms of 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
The re-leasing spreads reported by A-REITs have generally competition-led discounting, slowing sales growth and a
outperformed our implied re-leasing spread model in rising cost base. Source: JLL Research
Methodology: The implied re-leasing spread is the difference between the cumulative growth in retail turnover growth
per square metre and the cumulative growth in rents at expiry of a 5-year lease.
ABS Retail Trade figures were adopted excluding spending in the major tenant categories of supermarkets and
department stores to accurately reflect sales for specialty tenants. JLL total stock and supply estimates (for regional,
sub-regional and neighbourhood shopping centres) were used to assess the retail sales growth on a per square metre
basis – an assumption was made for the specialty retail floorspace component of the additional supply. Rent escalations 112 Castlereagh Street Sydney, NSW
were calculated as CPI+1.25% p.a. based on a standard 5-year lease. We assumed CPI rises to 2.25% by 2020, but
remains closer to the lower end of the RBA target range. Transacted by JLL on behalf of a Private Investor to a
Private Investor for approximately $59.0 million
Figure 16: Annual net income growth (specialty stores)
3.50%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
2014 2015 2016 2017 2018 2019 2020
Annual Increases (CPI+1.25%) Net income (including reversions)
Source: JLL Research
26 I JLL Shopping Centre Investment Review & Outlook 2018 I 27Home Hub Castle Hill, NSW
Transacted by JLL with co-agent on behalf of
LaSalle to Aventus Property Retail Fund for
$336.0 million and formed part of the LaSalle Large
Format Portfolio sale of $436.0 million
Tweed Hub, NSW
Home Hub Marsden Park, NSW Transacted by JLL on behalf of Aventus Retail
Transacted by JLL with co-agent on behalf of Property Fund to MPG Funds Management for
LaSalle to Aventus Property Retail Fund for $40.1 million and formed part of the Aventus
$100.0 million and formed part of the LaSalle Large Format & Convenience Retail Portfolio sale
Large Format Portfolio sale of $436.0 million of $60.1 million
28 I JLL Shopping Centre Investment Review & Outlook 2018 I 29Amazon
and the e-commerce trend
Amazon’s launch in Australia was widely anticipated and Physical retail space will remain critical in the customer
well-documented throughout 2017. It was certainly the major purchase and decision-making process. We believe that
focal point of the year for the retail industry and retail real physical retail has a strong role to play in the new retail
estate sector. Retailer sentiment was negatively impacted environment as retailers gradually adjust their business models
during the year by speculation about the potential impact on to adapt. There are a number of tactics which landlords are
existing retail businesses. Amazon’s local operation will create using to combat the impact of online retailing, including:
competition for retailers in a range of segments, and is likely to
depress price growth and compress profit margins. • Increase the floorspace dedicated to Food and
Beverage (F&B), grocery and non-retail uses – the
Amazon’s initial launch into Australia was arguably over- strong consumer trend towards dining out supports the
hyped, based on the limited range offered and less significant need for revitalised and expanded dining precincts in
discounting than consumers and the retail industry were shopping centres.
expecting. However, the implications of Amazon’s medium and
• Offer entertainment, experiences and events – the
“ Owners are concentrating
long-term impact on retailers should not be underestimated.
The impact may just be more of a gradual accumulation
social aspect of retail has become more important as on upgrading shopping centre
millennials seek a different shopping experience than
of market share rather than an initial surge as some were
previous generations. environments to improve customer
anticipating.
• Introduce new cutting-edge retailers and online experience and drive foot traffic
Over the next five years, Amazon could take approximately
0.5% p.a. from bricks and mortar retail turnover growth, in our
retailers – in the United States, what were traditionally
pure-play online retailers have now become a source of
and sales productivity. Although a
view. Our main assumptions are: leasing demand, such as Warby Parker and Bonobos, as number of national retail chains
they begin to build their physical presence to continue to
• Total retail turnover in Australia grows at 3.5% p.a.; expand and maintain their growth trajectory. have increased pressure on landlords
• Amazon retail revenue in Australia reaches $10.5 billion • Refurb and redevelop centres to remain competitive with respect to lease negotiations,
within five years – equal to 24% of the online retail market; – redevelopment has become crucial given the growing
and competition, not just with competing shopping centres occupancy rates have held up
• Online retail spending growth accelerates to account for
but with e-commerce as well. relatively well. Landlords will
11.5% of total retail turnover in Australia (from 7.7% as at
November 2017).
• Explore mixed-use or change-of-use opportunities
– many shopping centres are exploring opportunities continue to invest in projects which
to extract value from their sites by potentially adding utilise the latest technologies and
residential, commercial or hotels to utilise surplus land or
air space above centres. adapt centres to evolving consumer
trends. Investors are increasingly
utilising our market leading
sustainability services in order to meet
requirements and reduce the impact of
rising electricity costs.”
Tony Doherty
Head of Retail Property & Asset
Management, Australia
30 I JLL Shopping Centre Investment Review & Outlook 2018 I 31Quantifying the benefit
of tenant mix changes in sub-regional shopping centres
The sub-regional shopping centre tenant mix is changing. We F&B increased from 13% of specialty floorspace in 2009 to In a low-growth environment, and in a retail sub-sector where Our key assumptions are:
estimate that further changes in the tenant mix towards Food 17% in 2017 (or 4 percentage points). Retail Services also the leasing and retail sales risks are to the downside, the
Catering (F&B) and Retail Services can generate approximately went up by 4 percentage points over the same period to 14%. shifting tenant mix primarily reduces risk to some extent, in our • F&B and Retail Services continue to grow as a proportion
0.6% p.a. rental income growth in addition to organic market The biggest contractions were in Homewares and Leisure view. While F&B is still discretionary spending and subject to of floorspace, and Apparel, General Retail and Leisure
rental growth. which each declined (as a share of specialty floorspace) by 3 cyclicality, we see it as less at-risk than Apparel, which is more contract as a proportion of floorspace – shown in the
percentage points. of a long-term challenge for sub-regional centres. In addition, chart (Figure 18).
Furthermore, sub-regional specialty rents grew by changing the tenant mix also provides some upside potential • Specialty rents for all categories to grow at 2.1% p.a. (JLL
approximately 27% between 2009 and 2017 (or 3.0% p.a.) on So, can re-mixing offset a structural slowdown in rental growth? for rental growth. forecast) except F&B, which grows at 3.2% p.a.
a weighted average basis (Urbis). Approximately 4 percentage
points (or 0.3% p.a.) of the 27% growth can be directly Three scenarios (overleaf) estimate the potential impact The third scenario looks purely at the impact of changing the • F&B rents are assumed to outperform other categories
attributed to the change in the tenant mix. of tenant mix re-weighting on sub-regional specialty store tenant mix while assuming rents remain the same as 2017 based on the consumer trend to dining out and the
rental growth over the next eight years, based on the previous levels. It shows that the specialty rent uplift would be only outperformance of retail turnover growth in this category
Figure 18 shows the increase in the proportion of sub-regional eight years. Subsequently, changes in the tenant mix, shown 3.8% in total. Given the higher fit-out contributions (capex) historically (5.5% p.a. 10-year average vs Total Retail at
floorspace towards higher-rent paying categories of Food in Figure 18, could boost growth by 5.6 percentage points required for F&B tenants, compared with other use types such 3.6% p.a.).
Catering (i.e. F&B outlets) and Retail Services between 2009 (from 19.9% to 25.5% cumulatively), between 2017 and as Apparel or Homewares, it suggests that the benefits of re- • No adjustment has been made for the greater capital
and 2017. For example, F&B rents are approximately 48% 2025. Therefore, a 0.6% p.a. rental growth premium could be mixing are more of a long-term play. expenditure required to fit out an F&B tenancy (incentive)
higher than Apparel rents and 30% higher than General Retail. generated across a typical sub-regional centre from 2.3% p.a. compared with other use types.
Rents for Retail Services are approximately 26% higher than to 2.9% p.a., to be more in line with the historical rate of 3.0%
Leisure retailers and 50% higher than Homewares tenants. The p.a., by extrapolating the trend in the changing tenant mix.
motivation for the change in the use type is therefore clear.
Figure 19: Specialty rent relativity – sub-regional centres
200
180
Figure 18: Proportion of specialty floorspace by use type 160
140
120
Index
Food catering 100
(take-away, cafes, restaurants) 13% 17% 25%
80
Retail Services 10% 14% 17% 60
Phone/Mobile 3% 3% 3% 40
20
Apparel 33% 32% 27%
0
Jewelry 4% 4% 4% Jewellery Phone/ Food Catering Retail Food General Leisure Apparel Homewares
Mobile (take away, Services (fresh) Retail
cafes, restaurants)
General Retail 12% 11% 7% Source: Urbis, JLL Research
Homewares 8% 5% 4%
Food 10% 9% 9% Figure 20: Rental growth impact from tenant re-mixing – sub-regional centres
Leisure 9% 6% 4% Increase in specialty rent
Scenario
Total Per annum
Historical change 2009-2017 26.9% 3.0%
Change in tenant mix with rental growth 2017-2025 25.5% 2.9%
No change in tenant mix, with rental growth 2017-2025 19.9% 2.3%
Source: Urbis, JLL Research Change in tenant mix, static rents (immediate change – development scenario) 3.8% n.a.
Source: JLL Research
32 I JLL Shopping Centre Investment Review & Outlook 2018 I 33Department storс Long lease terms clearly provide some buffer for landlords in
the case of controlled rationalisation, but in the event of further
deterioration in trading conditions and if one department store
chain were to close, there would be some vacancy risk for
- Revising business strategies landlords. The competitive landscape for department stores
could change substantially in 2018 given the sales trajectory,
with the potential for new or revised business strategies and the
Department stores (including discount department stores) to reverse the structural decline of the sector via a number of potential for a business sale or takeover.
have faced structural headwinds at a global level for some strategies:
time, especially in the United States where department store
closures have been significant in the last few years. In Australia, 1) Improve the product range and merchandise to make it
department store closures have been much more resilient more appealing to customers and millennials in particular; Figure 23: Store count of major department stores
to-date, with only limited impact from store closures and space
2) Improve the in-store environment by investing in store 70
handbacks. Myer announced a further three store closures in
refurbishments;
September 2017, while the other groups have been less actively 65
shrinking their store numbers. Nevertheless, we are becoming 3) Improve the customer service experience; and
60
4) Grow online distribution channels.
55
Figure 21: Department store share of total retail sales The optimal scenario for owners is if these revised business 50
strategies begin to gain traction and improve sales and
profitability. The realistic scenario is that store network 45
14% rationalisation and space handbacks will continue to occur in 40
the least profitable locations as leases expire. The downside risk
12% scenario is if there is consolidation in the sector or if one of the 35
five department store chains (Myer, David Jones, Kmart, Target 30
10% or Big W) were to close or go into voluntary administration.
25
8% 20
Figure 22: Department store retail sales index Myer David Jones
6%
FY13 FY14 FY15 FY16 FY17 FY18* FY19* FY20*
200
4% * Estimate
180 Source: Company Reports, JLL Research
2% 160
140
0%
120 Figure 24: Store count of discount department stores
1992 1997 2002 2007 2012 2017
100
350
Australia US 80
Source: ABS, United States Census Bureau, JLL Research 60 300
40 250
increasingly cautious around the outlook for department stores 20
in Australia and the potential impact it may have on landlords if 200
there were to be consolidation in this segment. 0
1992 1997 2002 2007 2012 2017 150
In the US, department stores now account for just 3.4% of
total retail sales (as at December 2017), compared with 5.9% in Australia US 100
Australia. Total department store sales in Australia have been
relatively stable since 2009, compared with a persistent decline Source: ABS, United States Census Bureau, JLL Research
50
in the US since 1997.
0
Retail sales growth for department stores in Australia has Kmart is likely to continue to expand its store network via store Big W Kmart Target (inc. Target County)
remained subdued despite revised business strategies and conversions and new store commitments. David Jones has pre-
management restructures. Kmart has been the exception, committed to three new stores, but expansion is likely to be fairly
having grown sales and market share substantially in the last limited beyond those commitments. Myer and Target are likely FY11 FY12 FY13 FY14 FY15 FY16 FY17
few years and continuing to expand their store network (Figure to continue to rationalise their store networks, with potential for
Source: Company Reports, JLL Research
24). Department stores are generally trying to work out how some contraction from Big W as well, as leases expire.
34 I JLL Shopping Centre Investment Review & Outlook 2018 I 35Outlook
Sydney and Melbourne retail markets will continue to benefit well in terms of fundamentals but tight yields in the sub- “ A range of buyer groups will be acquisitive this year, with
from strong economic conditions. Sydney’s infrastructure sector will restrict some institutional players from acquiring.
boom has flowed through to multiple sectors of the economy offshore and unlisted wholesale funds being the key driver
and business conditions remain positive. In Melbourne, Retail market fundamentals are expected to be relatively
strong population growth will be a key driver underpinning stable in 2018. The macroeconomic backdrop will be of demand for major assets. Australia continues to be a key
retail spending growth and demand for retail space. While supportive of retail spending growth with the economy
forecast to strengthen and wage growth set to recover. We
investment destination in the Asia Pacific region for core
slightly more opportunistic, Brisbane presents an opportunity
to capitalise on a decade-wide house price spread between expect shopping centre occupancy rates to remain resilient and core-plus capital. Liquidity in the sector remains high
Sydney and Brisbane, which will fuel further interstate in 2018. However, the leasing market will continue to be
migration and a recovery in retail spending growth over the somewhat challenging as landlords take the opportunity to but investor selection criteria has tightened. Transaction
medium term. Conditions in the Perth retail market are likely replace underperforming retailers and bring in new retailers
to evolve the tenant mix to reflect new consumer preferences.
activity is likely to be strong in 2018, and above the long-term
to begin to recover, but from a relatively low base. The swing
factor for Perth will be the level of supply which is in the average, but may not be as strong as previous years. Owners
pipeline as centres are potentially expanded. Adelaide will Owners will look to more actively manage their portfolios,
continue to be a relatively stable market but the above-trend as well as their assets, in order to outperform in this evolving of retail assets will take a more active approach to portfolio
retail spending growth is likely to moderate. retail environment. In addition to exploring mixed-use
opportunities and intensive retail asset management to
management moving forward in terms of transactions and
While retail market conditions vary within each sub-sector, extract value, a number of risk mitigation strategies are development in order to reduce risk and ensure exposure to
CBD retail is poised to outperform – particularly in Sydney and likely to be employed. Some include; diversifying portfolio
Melbourne. Infrastructure upgrades, residential supply, robust exposure by retail sub-sector and state, reducing exposure strong or stable assets. ”
international tourism growth and strong CBD employment to non-core/underperforming assets and re-investing capital
Simon Rooney
will be supportive of CBD retail market fundamentals. Super- into assets which can deliver growth. Reducing exposure
regional shopping centres will continue to attract customers to large single assets will also provide opportunities for
and retailers in the competitive retail environment, while sub- capital redeployment either into accretive development or
regional centres will continue to refine the tenant mix to remain acquisition opportunities. The key strategy for acquisitions in
competitive. Neighbourhood centres will continue to perform 2018 will be careful asset selection.
Head of Retail Investments, Australasia
Key Retail Drivers
Population growth
(10yr forecast p.a.) 1.3% Globally, second highest for an advanced economy
Business investment
(p.a. as at Dec-17) 7.4% A precursor to wage growth
Labour market growth
(p.a. as at Feb-18) 3.5% Double the 10-year average
Wages
(3yr forecast p.a.) 2.6% Recovery from 2.1% p.a. avg 3-yrs to 2017
Tourist arrivals
(3yr forecast p.a.) 6.6% Remains a supportive driver
Source: JLL Research, ABS,Deloitte Access Economics, Oxford Economics
36 I JLL Shopping Centre Investment Review & Outlook 2018 I 37Authors
Simon Andrew
Rooney Quillfeldt
International Director Director
Head of Retail Investments Strategic Research
Australasia Australia
+61 2 9220 8497 +61 2 9220 8728
simon.rooney@ap.jll.com andrew.quillfeldt@ap.jll.com
Simon has worked with JLL for over twenty years and leads a Andrew is responsible for JLL’s retail research across
specialist team that focuses on major retail acquisitions and Australia. His primary responsibilities include: analysis of key
disposals across Australia. Simon is the recognised market trends and drivers of the retail sector, reporting on market
leader in this field, having transacted over AUD 15 billion since performance and providing strategic advice to the national
2012 with a national market share of over 75% for agency Retail Investments and Management teams. He also has an
negotiated transactions over AUD 100 million. active role in the Real Estate Intelligence Service (JLL’s research
subscription service) and has contributed to a wide range of
research publications on behalf of the firm. Andrew has ten
years’ experience with JLL and holds a degree in Property
Economics from the University of Technology, Sydney.
Contributors
Lara Jamс Fiona Annabelle
Britton Sherley Ellender Atkins
Associate Director Associate Director Analyst Senior Analyst
Retail Investments Retail Investments Retail Investments Research
Australia Australia Australia Australia
+61 2 9220 8678 +61 2 9220 8425 +61 2 9220 5919 +61 2 9220 8610
lara.britton@ap.jll.com james.sherley@ap.jll.com fiona.ellender@ap.jll.com annabelle.atkins@ap.jll.com
The Strand Arcade, NSW (50%)
Sold as part of the Vicinity Centres / GIC asset swap
for $111.7 million
38 I JLL Shopping Centre Investment Review & Outlook 2018 I 392017 Retail Transactions (Over $20 million) 2017 Retail Transactions (Over $20 million)
Sale Price Indicative Indicative GLA Sale Price Indicative Indicative GLA
Property name Suburb State Date (AUD) Initial Yield Initial Yield (SQM) Price/sqm Vendor Buyer Property name Suburb State Date (AUD) Initial Yield Initial Yield (SQM) Price/sqm Vendor Buyer
(Passing) (Fully Leased) (Passing) (Fully Leased)
CBD Mango Hill Market Place2 Mango Hill QLD Oct-17 $61,000,000 5.55% 5.55% 7,851 $7,770 Horizon Capital Management ISPT Retail Australia Property Trust (IRAPT)
DEXUS Property Group/Dexus Wholesale Albany Creek Square Albany Creek QLD Nov-17 $55,880,000 6.96% - 10,068 $5,550 Charter Hall Retail REIT (CQR) Fortius Funds Management
MLC Centre (50%) 1
Sydney NSW Jun-17 $722,500,000 4.30% 4.70% 77,720 $18,592 QIC Global Real Estate
Property Fund (DWPF)
Bluewater Square Redcliffe QLD Sep-17 $55,250,000 7.07% 7.72% 10,004 $5,523 Alceon Group/CP Retail Elanor Investors Group
Queen Victoria Building (50%) (P)2 Sydney NSW Nov-17 $301,200,000 5.25% 5.25% 13,668 $44,074 GIC Vicinity Centres
Benowa Village Benowa QLD Oct-17 $49,500,000 5.08% 5.08% 6,318 $7,835 Coles Group Property Developments Private Investor
The Galeries (50%) (P)2 Sydney NSW Nov-17 $143,100,000 5.00% 5.00% 14,849 $19,274 GIC Vicinity Centres
Arena Shopping Centre Officer VIC Jun-17 $48,100,000 5.42% 5.42% 8,141 $5,908 Parklea Developments Private Investor
The Strand Arcade (50%) (P) 2
Sydney NSW Nov-17 $111,700,000 4.75% 4.75% 5,797 $38,537 GIC Vicinity Centres
Worongary Town Centre Worongary QLD Jun-17 $46,300,000 6.26% 6.26% 7,097 $6,524 AHC SCA Property Group
112 Castlereagh Street, Sydney1 Sydney NSW Jun-17 $59,000,000 3.76% 3.76% 1,561 $37,808 Private Investor (Karen Beck) Private Investor
Woodcroft Village Woodcroft NSW Sep-17 $43,850,000 5.46% 5.81% 4,652 $9,426 The Trust Company (Australia) Private Investor
Country Road Building1 Brisbane QLD Nov-17 $53,950,000 5.72% 6.22% 3,529 $15,288 Abacus Property Group Deutsche Bank
The Station Oxley Oxley QLD Feb-17 $43,500,000 6.50% 6.68% 7,093 $6,133 Folkestone Savills Investment Management
Buckley's Bar, Opera Quays Sydney NSW Aug-17 $21,500,000 4.10% 4.10% 408 $52,696 Kazal Family Well Glory Investment
Peregian Springs Shopping Centre Sunshine Coast QLD Aug-17 $41,500,000 5.35% 5.40% 4,772 $8,697 Alceon Group Private Investor
Regional
Entrada Centre North Parramatta NSW Aug-17 $41,325,000 5.79% 5.79% 5,570 $7,419 Centennial Property Group Cook Property Group
AMP Capital Shopping Centre Fund (ASCF)/
Indooroopilly Shopping Centre (50%) 2,3
Indooroopilly QLD Nov-17 $800,000,000 4.25% 4.25% 116,447 $13,740 Commonwealth Superannuation Corporation (CSC) Charter Hall Retail Management Limited
AMP Capital Diversified Property Fund (ADPF) Highfields Village Shopping Centre Highfields QLD Jul-17 $41,000,000 6.00% 6.00% 7,928 $5,172 Lauder
(CHRML)
GPT Wholesale Shopping Centre Fund
Highpoint Shopping Centre (25%) Maribyrnong VIC Jul-17 $660,000,000 - 4.21% 149,576 $17,650 Highpoint Shopping Centre (Besen Family) Illawong Village Illawong NSW Sep-17 $40,000,000 - 6.30% 6,471 $6,181 Private Investor Private Investor
(GWSCF)
Centrepoint Tamworth Tamworth NSW Jan-17 $38,500,000 7.55% 7.76% 9,173 $4,197 Private Investor Intergen Property Group
Chatswood Chase (49%) (P)2 Chatswood NSW Nov-17 $562,300,000 4.75% 4.75% 63,715 $18,011 Vicinity Centres GIC
Clifton Village Shopping Centre Clifton Beach QLD Nov-17 $36,000,000 6.50% - 7,900 $4,557 Arkadia Indigenous Business Australia (IBA)
Sub-regional
Mudgeeraba Market Shopping Centre
Rockingham Shopping Centre (50%) Rockingham WA Nov-17 $305,000,000 - - 61,610 $9,901 Vicinity Retail Partnership (VRP) AMP Capital Shopping Centre Fund (ASCF) Mudgeeraba QLD Apr-17 $35,800,000 6.31% 6.31% 6,093 $5,876 Property Syndicate SCA Property Group
and Franklin Square
Kawana Shoppingworld (50%)2 Buddina QLD Dec-17 $186,000,000 5.50% 5.50% 38,401 $9,687 Mirvac Group ISPT
Park Village Shopping Centre Middle Park QLD Apr-17 $35,200,000 5.81% 6.48% 6,441 $5,465 Undisclosed (Reciever and Manager - Lucas & Co.) Private Investor
Salamander Bay Centre2 Salamander Bay NSW May-17 $174,500,000 6.00% 6.00% 24,000 $7,271 Vicinity Retail Partnership (VRP) Charter Hall Retail REIT (CQR)
Torquay Village Torquay VIC Dec-17 $35,000,000 5.89% - 6,780 $5,162 Coles Group Property Developments Private Investor
Marketown Shopping Centre Newcastle West NSW Jul-17 $163,250,000 5.37% 6.26% 26,011 $6,276 Private Investor (Cartier Holdings) AMP Capital (Sun Super)
Northcote Central Northcote VIC Nov-17 $34,000,000 3.47% 3.91% 6,657 $5,107 Private Investor Private Investor
Toormina Gardens Toormina NSW Dec-17 $83,300,000 6.70% 6.95% 21,200 $3,929 Vicinity Centres/Challenger Fort Street Real Estate Capital Fund III
Highpoint Plaza Ashgrove QLD Jun-17 $33,500,000 7.47% 7.47% 5,079 $6,596 Trident Aviator Capital
Wodonga Plaza Wodonga VIC Jun-17 $43,500,000 8.50% - 17,560 $2,477 Vicinity Centres M Group
Raymond
Mowbray Marketplace and Target Centre Mowbray TAS Aug-17 $38,550,000 7.22% 7.52% 12,052 $3,199 Highbrand Real Asset Management Group (RAM) Terrace Central Shopping Centre NSW Jun-17 $33,500,000 6.55% 6.96% 7,236 $4,630 Vicinity Centres Panthera Property Group
Terrace
Muswellbrook Marketplace Muswellbrook NSW May-17 $34,250,000 6.87% 8.38% 12,836 $2,668 Lederer Group Muswellbrook Shire Council Private Investor (Chin Yuan International
Eli Waters Shopping Centre Eli Waters QLD May-17 $33,180,000 6.25% 6.44% 6,334 $5,238 Karmah Developments (Greg Karedis)
Hastings Central Shopping Centre Hastings VIC Apr-17 $32,100,000 5.97% 6.08% 8,015 $4,005 Payton Capital Henkell Bros Enterprise)
Port Pirie Plaza Shopping Centre Port Pirie SA Sep-17 $32,050,000 7.88% 7.88% 11,027 $2,907 Private Investor Primewest Big W and Woolworths Shopping Centre Gawler SA Jul-17 $32,050,000 6.87% 6.87% 11,071 $2,895 Gawler Property Holdings Harmony Property Syndication
Renmark Square Renmark SA Nov-17 $24,700,000 8.42% - 12,024 $2,054 Charter Hall Retail REIT (CQR) Revelop Building and Development Gladstone Square Shopping Centre Gladstone QLD Jun-17 $31,500,000 7.50% 7.50% 6,897 $4,567 Charter Hall Retail REIT (CQR) Elanor Retail PropertyFund (ERF)
Wharflands Plaza Port Augusta SA Jul-17 $21,000,000 8.74% 8.74% 10,215 $2,056 Charter Hall Retail REIT (CQR) Private Investor Lakeside Square Shopping Centre Pakenham VIC Jul-17 $30,380,000 6.29% 6.35% 6,270 $4,845 Private Investor Private Investor
Neighbourhood Market Plaza Chipping Norton NSW Jun-17 $30,350,000 5.52% 5.63% 4,358 $6,965 Private Investor Private Investor
East Village (50.1%) Zetland NSW Aug-17 $155,300,000 - - 32,778 $9,457 PAYCE Consolidated (PAYCE) Mirvac Group Lisarow Plaza Lisarow NSW Jan-17 $29,100,000 6.10% 6.10% 5,248 $5,545 Private Investor Primewest
QIC Global Real Estate (QIC Australian Core Lane Cove Central Lane Cove NSW Dec-17 $29,000,000 5.34% 5.34% 3,696 $7,846 Private Investor Private Investor
Pittwater Place3 Mona Vale NSW Oct-17 $98,000,000 5.35% 5.65% 11,890 $8,242 Deutsche Asset Management
Plus Fund) Casuarina Village Shopping Centre Casuarina NSW Aug-17 $27,400,000 5.83% 5.86% 3,979 $6,886 CVS Lane Capital Partners Whistle Funds Management
MarketPlace Warner Warner QLD Sep-17 $78,350,000 5.18% 5.70% 11,477 $6,827 Warner Village AMP Capital (Swiss Pillar Investments AG) Moranbah Fair Shopping Centre Moranbah QLD Sep-17 $25,000,000 8.83% - 7,054 $3,544 Charter Hall Retail REIT (CQR) Elanor Investment Nominees
Bathurst City Centre2 Bathurst NSW Dec-17 $71,150,000 6.50% 6.50% 12,560 $5,665 Vicinity Enhanced Retail Fund (VERF) QIC Global Real Estate (QARP) ISPT (75%)/Coles Group Property Developments
Sugarworld Shopping Centre Edmonton QLD Oct-17 $24,750,000 5.57% 6.76% 4,758 $5,202 SCA Property Group
Stockland Corrimal Corrimal NSW Oct-17 $69,250,000 7.28% 7.51% 9,692 $7,145 Stockland Lederer Group (25%)
Chester Square Chester Hill NSW Sep-17 $68,500,000 3.78% 3.78% 8,270 $8,283 Keystar Private Investor Springfield Fair Springfield QLD Dec-17 $23,500,000 7.05% 7.05% 5,132 $4,579 Charter Hall Retail REIT (CQR) RAM Australia Retail Property Fund
40 I JLL Shopping Centre Investment Review & Outlook 2018 I 40 41 I JLL Shopping Centre Investment Review & Outlook 2018 I 41You can also read
