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News release


JLL Victoria records first neighbourhood Shopping Centre sale for 2016 

Asset demand continues to outweigh supply

​​​Victoria’s first neighbourhood Shopping Centre transaction for 2016 has been recorded in the off-market sale of The Laurimar Shopping Centre for $27,000,000. JLL Victoria Director of Retail Investments​ Stuart Taylor negotiated sale.

The strata-titled shopping centre development was completed in 2010 and comprises a GLA of 4,707sqm and is anchored by a full line Woolworths supermarket, ten specialty stores and one kiosk. The property is situated in the Laurimar Delfin Lend Lease residential estate, within the developing residential suburb of Doreen, approximately 37 kilometres north of the Melbourne Central Business District.

The sale represents an initial yield of approximately 6.11% - highlighting a continued trend of yield compression for this asset class. The successful purchaser was a Melbourne based private investor.

JLL recorded $224 million of neighbourhood transactions nationally in the first half of 2016, down 77% from the same period last year where a significant $960 million traded hands.

Mr Taylor said, “The incredibly strong result for this asset demonstrates the ongoing strength of the market for neighbourhood shopping centres, as well as the distinct lack of retail investment opportunities being presented to the market.”
“The compression of yields is primarily driven by the availability of capital, limited property acquisition opportunities, expectations of the continued low interest rate environment and also sound investment fundamentals for Victorian neighbourhood assets, Mr Taylor added.

According to JLL Research,​ Victoria now has the strongest retail turnover growth of all the states on a year on year basis (5.1%). The Latest ABS monthly retail turnover (seasonally adjusted) data shows that turnover ($6.3 billion) in May 2016 is the highest on record.

Victoria is also showing positive signs for rental growth, with retail speciality store rents remaining flat across all states with the exception of New South Wales and Victorian centres.  The rental recovery is across all shopping centre classes of Victorian neighbourhood centres with a third quarter of positive modest rental growth recorded.

“The majority of the income for Shopping Centre assets is driven by food and grocery based retailers, investors continue to be attracted to this asset class given the sector stability and security of the asset’s income.”

The availability of acquisition opportunities may be further constrained with supply projections for new centres significantly down according to JLL Research. Victorian neighbourhood centre supply has slowed in the first half of 2016 with no new completions recorded. Supply remains modest compared to historical averages and is constrained given underlying demand from population growth.

Annabel McFarlane, JLL Director, Strategic Research​ said “Melbourne is in the middle of a neighbourhood Shopping Centre supply shortage. Even with a number of expected shopping centre completions in 2018, average annual supply through to 2020 will be below the long term average (27,600 sqm pa.)”

Mr Taylor concluded, “Yields have compressed significantly over the past 18 months with median yields for neighbourhood centres tightening by 200 basis points since mid-2010. This transaction and the lack of acquisition opportunities suggests that yields could continue to tighten.”