150,800 sqm of retail projects commenced in Q1 2012, according to Jones Lang LaSalle - the highest volume of projects begun since Q4 2007.
Jones Lang LaSalle says Craigieburn Central Shopping Centre in Melbourne represents just over a third (55,000 sqm) of the projects by size, while Eureka Funds Management’s seven-stage, 38,000 sqm extension of Brisbane’s Indooroopilly Shopping Centre represents another significant portion.
JLL says despite the increase in regional, sub-regional and neighbourhood commencements, construction activity is still dominated by bulky goods centres, due to Masters Home Improvement and Bunnings’ expansions.
Tony Doherty, JLL head of retail management, says construction activity is consistent with retail landlords selling down non-core assets to focus on development and investing in existing assets.
Simon Rooney, Jones Lang LaSalle Australia head of retail investments, says 2012 started with strong levels of investment activity.
“There have been 16 retail sales transactions totalling $853.2 million in 2012 to date,” Rooney says.
“The strong demand for retail assets that has been evident over the last couple of years implies institutional investors are banking on a cyclical recovery in the retail sector,” he says.
“Heightened risk aversion among investors and the diverging performance between prime and secondary centres has resulted in greater demand for high quality assets from most buyer types.”
The Q1 figures show the Sydney sub-regional yield range widened to 6.5 – 9.5 percent in Q1, from 6.5 – 9.0 percent in Q4. The south-east Queensland sub-regional yield range widened to 7.0 – 9.0 percent from 7.0 – 8.75 percent.
For neighbourhood centres, yields in the Sydney market softened at the lower end of the range to 7.25 – 10.0 percent, from 7.25 – 9.75 percent.
Bulky goods yields in Sydney softened to 8.75 – 11.25 percent from 8.75 – 11.0 percent.
Neighbourhood yields tightened in Melbourne to 7.5 – 8.5 percent, from 7.5 – 8.75 percent.
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