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JLL has the answers to your most critical questions. Browse the below topics to read global, regional and local insights to assist you during these unprecedented times. We’d love you to submit your own question too. Our JLL team will respond as soon as we can.

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    What does the future of 
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    While businesses across Australia are easing into a new normal, and as confidence slowly returns, we recognise that there are still a few questions that remain unanswered.
    We’ve captured snapshots of our experts across a range of office specialisations addressing some of the top questions presented to us.

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    Re-imagine the future of our workplaces

    Many businesses like yours are opening up their workplaces again, but do you know how to adapt to the next normal and plan for the longer term?

    EP8: Are COVID office deals worth moving for?

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    Is your workplace ready to keep your employees safe & healthy?

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    The individual characteristics of markets in terms of segmentation will determine how quickly they recover. Domestic leisure is expected to be the first demand segment to return, followed by corporate travel, while MICE (Meetings, Incentives, Conventions & Exhibitions) and international travel will be the last.

    Whilst “drive to” leisure has already started the recover and intrastate travel is increasing off a very low base, the remaining state border controls continue to frustrate interstate travel. The pace of recovery will also be dependent on when and how quickly normalised airline travel patterns return. Our discussions with operators and airports indicate that previous domestic passenger movements may not return to pre-COVID-19 levels until 2023, and international until 2025-2027.

    Wider acceptance of virtual meetings and fiscal prudence for many companies, are all anticipated to contribute to continued softness in group corporate travel and MICE business in the short term however, with recovery anticipated over the medium term in line with economic recovery.

    Canberra is most likely to see a stronger recovery in the near-term, as the market relies least on international visitors in hotel accommodation (hotels, motels & guesthouses), making up around 12% of visitor nights according to Tourism Research Australia’s 2018 data. Canberra also benefits from consistent government and public sector related demand and less reliance on MICE driven room night demand than other major markets.

    Adelaide, Brisbane, Darwin, the Gold Coast, Hobart and Perth have varying levels of reliance on international travellers in hotel accommodation with international visitors. A key consideration for these markets is around the impact of new supply, which may limit the ability to grow ADR (Average Daily Rate) and in-turn asset profitability following COVID-19 affected trading. Interesting to note that these markets are also at fundamentally different stages. For instance, Brisbane and Perth are markets that are at the tail end of their supply cycle.

    Melbourne and Sydney markets rely more heavily on international visitors in hotel accommodation at 34% and 43% respectively. A full recovery for these markets will follow the relaxation of restrictions on international travel.

    Whilst leases are a relatively uncommon operating structure for hotels compared to hotel management contracts, we are aware of a number of operators (tenants) who have requested rental abatement or deferrals from their landlords given that many businesses are currently closed, in hibernation or materially adversely affected. Given the tenant keeps any profit after payment of rent under a leased operating structure, these hotels are typically the very first to experience hardship.

    With major operators actively pursuing an ‘asset light’ strategy, and new accounting standards affecting balance sheet reporting for leases, we have seen a general shift by operators away from new hotel leases in recent years and expect this trend to continue. There are exceptions to this of course, particularly in the serviced apartment sector where leases are more common.

    There is particular hardship in those circumstances where the level of rent was already high pre-COVID-19 and may eventuate in some of these leases being surrendered.

    For leases which are supported, this reaffirms the strength to their covenant. With the cost of debt declining, and expected to remain at lower levels, we expect yields to remain steady for these assets.

    Moving forward we expect hotel leases will become less common. Property owners with upcoming options or renewals may wish to consider alternatives outside hotel leases as a likely outcome of future negations.

    With some restrictions on domestic travel in place for the short term, and international travel restrictions for the foreseeable future, the timeframes for purchasers to satisfy due diligence has been impacted.

    At present, purchasers will need to rely on local consultants and trusted advisors who are in the target market to review various aspects of the asset and provide comfort. This has resulted in due diligence periods stretching out, and in some cases stalling until travel resumes.

    Australia’s Foreign Investment Review Board (FIRB) has recently announced temporary changes to their review criteria, reducing the threshold for the review to $0 and extending the statutory deadline for applications to 6 months.

    Nearly all assets purchased by a foreign entity will be conditional upon FIRB approval and based on current experience, vendors should set expectations in line with current guidance on timing.

    This could possibly place foreign investors at a disadvantage in the current market, which will potentially be amplified in situations where vendors require transaction certainty within a specific timeframe.

    This is a great question. At this stage a firm trend is not especially evident and given the extraordinary circumstances we need to take care not to suggest precedents. However, we are able to make some general observations based on what we have experienced to date.

    • It remains that hotel leases are a relatively uncommon operating structure within the sector. The majority of hotels of scale tend still to be operated under hotel management contracts. This said, leases have become more commonplace in recent years and amongst some brands/operators are a preferred model (particularly where the operator is a franchisee).
    • While a small number of hotels have secured quarantine related business, for the most part, the hotels sector has been hit particularly hard by COVID-19 and many businesses are currently closed, placed in hibernation and materially affected. In the case of leased hotels, tenants have been under considerable pressure and have insufficient cash flow and cash reserves to service rent for an extended period without the business being operational. We’ve noticed the circumstances are compounded in the case of some newer properties that have yet to achieve stabilisation and rents represents a larger than usual proportion of profit (also the case for ‘over-rented’ properties).
    • Rental abatement or deferrals and payment plans have generally been agreed between landlords and tenants. However, a careful balance has been struck between the parties. While relieving pressure on the tenant in terms of rental obligations has been the leading point of discussion, landlord’s also need to service their debt and meet their obligations as well.
    • The MCOC is typically the starting point for discussion between the parties. Most have demonstrated approaches that are unique to the landlord and tenant’s respective situations, factoring in a variety of considerations such as the current level of rent and the character of the associated business. Long-term viability, the specific terms of the agreement, rent review structures and in some instances the landlord and tenant’s wider commercial exposure to COVID-19 might also be considered by the respective parties. However, we believe it is important to remain mindful that the immediate objective is to navigate immediate operational pressures and not renegotiate terms.
    • In the cases that we’ve experienced what is recommended under the MCOC has been modified to suit specific landlord, tenant and property circumstances. Typically a period of rent relief with a period of repayment over the 2020/21 financial year has been agreed. The extent of the waiver has been varied. Where property costs are the responsibility of the tenant, these have tended to continue to be costs serviced by the tenant.

    It is our view that while the response COVID-19 was immediate and universal, the pace of recovery is expected to vary significantly between markets.

    Those markets that are orientated towards local and domestic demand are positioned best for the trading recovery. These markets include capital cities as well as Australia’s established leisure destinations.  Of course, the pace of recovery will be dependent on the easing of trading restrictions, social distancing, the lifting of border restrictions and airlift both intrastate, interstate and ultimately internationally.

    While it is to be expected that demand for hotel accommodation will be constrained by residual health concerns as well as a level of post-COVID-19 austerity, some pent-up or ‘frustrated’ demand is anticipated.  Given the extended stay-at-home period that we have experienced, this is likely to be most evident within the leisure segment.  However, while inherently cautious, corporate Australia and New Zealand is motivated to return to normal.  While it may be some time before business events and conferences of scale normalise, individual corporate travel is anticipated to experience a level of recovery as a consequence of essential travel having been postponed.

    The pace of recovery within individual markets is also dependent of circumstances pre-COVID-19.  Prior to the outbreak, Australia’s markets were experiencing a period of substantial supply increases.  Despite the extraordinary circumstances that subsequently transpired, these markets were to experience a period of recalibration and performance moderation.  Distinguishing between the impairment of COVID-19 and supply will sometimes be challenging.  But, those markets experiencing substantial supply increases, are expected to take longer to recover.

    COVID-19 delivered an immediate and profound demand-shock across Australia’s hotel sector. We anticipate the recovery to be similarly characterized by business volumes and be led by occupancy improvements.  In some cases, given the simultaneous necessity for markets to absorb new supply, we may not experience a full recovery for several years.  Prior to reaching near pre-COVID levels, this is likely to limit the opportunity for ADR growth.

    A notable positive from COVID-19 and the hotel industry’s response, is the owner’s and operator’s enhanced focus in terms of operational efficiencies.  While revenue might be constrained over the near term, operational efficiencies identified post-COVID-19 are likely to be sustained.  This in turn may result in improved profitability despite revenue moderations. 

    Full service and luxury hotels of scale with substantial fixed costs and a reliance on the hosting of business events have been particularly hard hit. Hotel and resort operations that are dependent on discretionary leisure demand in non-city locations have also been hit particularly hard.

    Accommodation assets that are less reliant on international tourism, serviced apartments, lower cost and limited service hotels with lower and mid-market positioning are generally least affected.

    All hotel owners are faced with the challenge of cost management during this period.  Compounding this challenge is the need to respond quickly to improving trading circumstances and retain an uncompromised hotel and service offering.  Careful defensive and proactive asset management is essential.  JLL Hotels & Hospitality’s asset management team are market leaders in this regard supporting the firm’s clients globally.  

    The answer to this question is both market and asset specific.  We would encourage you to contact JLL’s Hotels and Hospitality valuation experts directly in this regard.

    Value and worth will depend on a host of factors including the location, market positioning, operating structure, quality of management, etc.  However, more generally while falls in value over the near term are anticipated this is not expected to remain a long-term market characteristic.  At this point, declines between 5% to 20% for hotels operated under a hotel management contract might be expected.  However, there will be instances outside this range, both positive and negative.  The main driver of value moderation is lower forecast profitability as well as a high degree of caution amongst industry participants.  As profitability and market confidence returns, we would anticipate a corresponding improvement in terms of the outlook for hotel capital value. 

    Anecdotally we expect that investors may be required to fund acquisitions with more equity than debt compared to pre COVID-19 levels, suggesting a higher weighted average cost of capital and in turn risk adjusted investment parameters.  We also note that some opportunistic purchasers are offering prices at levels that that would indicate some softening in yields.  However, this activity has yet to result in a transaction of note within the hotel accommodation sector. 

    JLL has recently published a paper in which it analyses hotel yields in a post-COVID-19 environment.  Please contact JLL Hotels & Hospitality for a copy.

    In a post-COVID-19 market, the fundamentals of the hotel market in both countries is unlikely to be subject to material change. People will continue to seek out new leisure travel experiences, create and foster business relationships in a face-to-face manner; and reconnect with their families, all placing pressure on demand for hotel accommodation.

    The key fundamentals of hotel investment remain, and in a post-COVID-19 market some features of the Australian and New Zealand markets are highlighted, particularly the countries’ profile as ‘safe’ investment domains.  The pandemic crisis has highlighted the importance of good governorship, with Governments acting decisively to protect its citizens and mitigate harm to the economy.

    Hoteliers have responded rapidly to the situation, redefining their businesses which has contributed to cost containment and improved utilization of staff resources.  Whilst hotel businesses have demonstrated an ability to be agile and dynamic in response to changing market conditions, in a post-COVID-19 market, we would expect some lingering improved cost ratios to apply.

    COVID-19 has also placed considerable pressure on the private short term letting market, and with Airbnb revenues expected to be adversely affected over the medium term this will most likely lead to a contraction in supply, as accommodation shifts to the private rental market.  The competitive influence that Airbnb and other similar platforms have over the hotel market is likely to assist hotels over the medium term recovery.

    Finally, there is an expectation in the construction industry for more competitive vertical construction pricing to emerge, as was observed in a post-GFC market.  This is likely to enhance the feasibility of constructing new hotel supply (and even assist in refurbishment / repositioning projects), particularly once the hotel market solidifies a recovery trend. 

    The tourism and hospitality industry in Australia has been fortunate to have been supported by the Federal Government’s JobKeeper initiative during the current crises. Under the scheme, employers can apply to receive $1,500 per eligible employee per fortnight, for the period commencing 30th March 2020 until 27th September 2020. With nearly three and a half months’ of further JobKeeper support remaining, hotels need to plan for the appropriate operational structure to take a hotel forward.

    Based on the current COVID-19 recovery in Australia, we do forecast further easing of restrictions on interstate travel which will lead to some pickup in corporate and leisure demand for hotels. If the State and Territory Governments in the region were to reach a consensus on the rumored trans-Tasman travel bubble by Q4 2020, this could further assist the industry. However, in the absence of large conference & events and international travel at least in the near future, we do not expect the hotels cash flow to return to pre-COVID levels anytime soon.

    As such, hotels need have the opportunity to review the staffing levels in line with the business forecasts in order to maintain the payroll costs from October onwards. This would include a detailed analysis of the organisation chart and prepare a restructuring plan to adapt to the “new normal”. Examples of initiatives could include cross training of employees to work across different departments, reducing the reliance on outsourced functions especially during low demand periods and by adopting modern technology to limit staff involvement such as a digital check-in kiosk.

    From our current hotel sale campaigns and general investor enquiry we are seeing a range of well capitalised and experienced investors encompassing private equity, high net worth individuals, owner operators, developers and investment funds who are ready to acquire assets once further signs of recovery emerge and investment grade hotel investment opportunities materialise.

    These “first mover” investors are focussing on long term investment metrics such as total returns rather than short term yields, while discount to replacement cost, alternate use and value add strategies are also key drivers. Additionally, owner-operators are willing to take a long term view and infill strategic gaps in portfolios as suitable opportunities present themselves.

    It is widely recognised that hotels within established leisure destinations less than a two hour drive of major capital cities will be the first to recover and we are already seeing many of these markets experiencing full occupancy on the weekends.

    As we saw last year from a transaction perspective, there’s been considerably liquidity in these regional locations as existing owners look to expand portfolio while first time entrants have been pushed out of CBD and metro locations due to a lack of opportunities.

    Whilst current trading conditions will have an impact on some transactions from both a pricing and/or debt finance perspective, we recently completed the sale of an asset in Daylesford with exchange occurring in the midst of COVID-19, proving that investors continue to see value in these regional leisure locations and are willing to move on the right opportunities.

    Lender appetite for Hotel financing is limited at present due to the current uncertainty, with trading recoveries expected to take a number of years depending on the easing of restrictions, return of domestic / international travel and an overall improvement in the Australian economy.

    Where financing appetite does exist for Hotels, it is mainly for high quality, well-structured transactions as lenders lean to more risk-averse underwriting strategies.

    Since the COVID-19 lockdown regime began, lenders have taken an accommodative stance, promoting productivity of existing exposures, focusing on serviceability and capital management. For existing Sponsors, this includes relaxing of facility covenant testing, interest deferrals and making liquidity available where required (consistent with government direction).

    It is however, important to note that these measures are temporary. New-to-lender finance is more challenging, with some lenders not seeking to take on new sponsor relationships. Pockets of liquidity are still available albeit at a commensurate pricing premium for the risk taken. Deeper liquidity is available at reduced LTV levels, or with more stringent covenants (e.g. higher ICR covenants).

    Given the ongoing volatility in global credit markets, we would encourage Hotel investors to employ the following regardless of strategy:

    • Allow extra time to conduct the debt raise process, due to the increased credit processes and operational pressures
    • Take advantage of the historically low interest rate environment (e.g. review swap costs);
    • Secure finance as early as possible;
    • Negotiate and structure loan covenants to future proof refinance risk;
    • Secure support through a ramp up in trade;
    • Build in extra covenant headroom; and
    • Maximise terms flexibility where possible.

    JLL Debt Advisory is well-positioned to advise clients and take advantage of current borrowing conditions by aligning capital requirements of borrowers and lenders, developing accretive financing solutions, securing returns across borders regardless of the region and overall market access.

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    In this market tenants are strongly focused on reducing gross occupancy costs across their business and adopting strategies to improve productivity. Strategies businesses are considering and adopting include improved efficiencies in warehouse design including space utilization, consolidation, automating processes and flexibility with their industrial footprint. We have seen a growing trend towards office consolidation and reduced office space on site as businesses recognize benefits of remote working.

    Tenants are placing a strong focus on supply chain strategies with inherent flexibility to cater for the current market changes. Primarily driven by transportation costs, a well-managed supply chain network will assist tenants in determining the optimal number of warehouses, location, disposals, and acquisitions. Supply chain optimisation will result in annual savings for tenants and position them to achieve a competitive market advantage.

    Industrial assets are considered defensive due to their underlying real estate fundamentals, they consist of land rich property holdings with typically long leases to single corporate tenants. In addition, the change in consumer behaviour has seen a greater demand for industrial space due to the impact of e-commerce and distribution networks associated with this supply-chain.

    The impact of COVID-19 has caused disruption to traditional supply-chain networks and resulted in Australian businesses considering greater diversification. We expect to see an increase in alternate markets to China such as Vietnam, Indonesia, Thailand and India. It will also provide the opportunity for some on-shoring of more critical manufacturing where Australia still has expertise such as medical supplies and specific pharmaceutical.

    While the market will consider alternate locations to diversify their supply chain risk, we expect a continued reliance on overseas suppliers due to cost and efficiencies however this would involve a diversity of locations rather than the heavy reliance on any one market.

    Growth in online retail (e-Commerce) over the past few months has been focused around food, fast moving consumer staples, health and pharmaceutical industries. This has resulted in a strong take up of short-term overflow warehousing and efficiencies through consolidation. The growth of e-commerce will also fast track last-mile delivery plans. Investors and occupiers will be looking for suburban locations that allow them to service their consumer base in an acceptable turnaround time.

    We expect to see continued levels of industrial investment due to the liquidity within the sector. Private investors have maintained their activity through the COVID-19 environment and we expect a continued wave of capital to focus on industrial as the syndicators, funds and REIT’s experience a broader return of confidence to the property markets.

    In a low cost of capital environment we expect owner occupiers will continue to increase their investment in real estate with the ability to also add value via sale and lease back structuring. 

    There are a number of different categories that are seeing increased demand.

    The cold storage sector has continued to go from strength to strength. There is no vacancy across the country and demand remains strong. The large automated warehouses are really only attractive to the bigger players in the market to invest in but even still, they are always highly sought after. Finally we are seeing the last mile, smaller infill locations with typically higher underlying land values which are also seeing strong demand.

    Overall though, what we're seeing is pretty strong and stable capital and demand for long-weighted income that's bankable. Because debt is challenging at the moment for a number of groups. So overcoming the debt piece by having a bankable covenant in the current environment is fairly important. 

    During the last few months we have seen that travel restrictions have had a flow on effect on the investment market. There has been a lot of liquidity in the private market because private investors weren’t impacted as heavily by the restriction on travel, so they were able to transact as normal within their local market. As a result we saw activity remaining.

    Offshore capital was more greatly affected but we are now seeing a comeback in confidence. As people become more confident in the new way of transacting and how we work, investors with mandated money are starting to acquire again. Globally, we are seeing Australia stand out as one of the best destinations to invest in in the world.

    We have seen some sectors benefit from the current circumstances and these are all really driving demand. The e-commerce sector in particular has been fast tracked and we’ve seen strong growth across all markets. The grocery and non-discretionary sector has also been very strong. But as we start to return to a more normalised market, there are some behavioural changes that remain which is driving demand. This is such as the reliance on online shopping and supply chain risks, meaning suppliers want to have greater certainty with greater holdings of stock.

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    Australia has fared relatively well on a global scale in terms of retail trade, partly reflecting the significant policy response to COVID-19. Asian countries were the first to experience notable monthly falls in retail spending. In China, monthly retail sales fell by 12.1% in January, whilst Hong Kong recorded a monthly decline of 41.3% in February.

    Australia reported the strongest monthly growth (at the time) ever recorded by the ABS in March, accelerating by 8.5%, in large part due to stock piling stimulating supermarket and household goods spend. However, this was followed by the largest monthly decline recorded in retail spend in April (‑17.7%), followed by a strong rebound in May (+16.3%). 

    Offshore capital is still expressing interest and appetite for the Australian retail market, seeing the relative value emerging in the sector, along with how well Australia has fared relative to other countries in terms of the handling of the health crisis. Multiple offshore groups require a local partner/manager for future acquisitions and are pursuing joint venture opportunities. Activity had been placed on hold during the peak of COVID-19 for many potential buyers, but offshore capital sources are re-engaging in exploring potential investment opportunities.

    Many retailers have withheld rent as they work through negotiations for rebates with landlords. Vicinity Centres reported that 49% of rent was collected over the March to May period. This is relatively consistent with major retail owners in the US, where approximately 55% of rent was collected by retail REITs. It was also consistent with the level reported across the JLL managed portfolio in April and May.

    With the commercial tenancy code of conduct set out in early April, landlords and small-to-medium enterprises (SMEs) were encouraged to negotiate rental relief on a proportionality basis. Anecdotally, many owners noted that this principle was followed for larger retailers too, with sales and rent down by a similar percentage.

    Some national retailers have been seeking more permanent rent reductions to more sustainable levels. Retailers are likely to rationalise their store networks in an accelerated manner since COVID-19 which is likely to contribute to a structural reset of rents in retail over 2020.

    In terms of foot traffic, CBD assets were most affected by the pandemic. Demand for these assets is driven by tourism, daily visitors and white collar employment. With borders closed to tourists, people encouraged to stay home (except for essential needs purposes) and the CBD workforce working from home during the pandemic, foot traffic and retail trade in the CBDs was significantly impacted through April and May. Regional shopping centres which have a lower proportion of ‘essential needs’ were also most impacted through the late-March to early-May lockdown.

    Foot traffic at local neighbourhood and supermarket-anchored centres held up relatively well, in large part due to product limits (and shortages) which impacted the frequency of visits. The scaling back of online grocery services to vulnerable customers only, also drove foot traffic in this category. Large format retail shopping centres were also resilient. Their large average store size, open/outward facing design and the nature of the goods (work-from-home and exercise equipment, entertainment, baby stores, pet stores etc.) helped insulate them from a significant downturn in trade.

    Australia has the strongest population growth of any advanced economy, which underpins retail spending growth. Although population growth is currently constrained by international migration, once restrictions on international borders are lifted, this number is anticipated to pick up. The time it will take for migration to return to 2019 levels is unknown at this stage, and subject to Government policy, but Australia is likely to be attractive over the medium to long term because of the relatively low number of COVID-19 cases.

    The demographics of Australia’s population have been supportive of retail performance, and will continue to be a driver in the medium to longer term. A bulge in the Australian population between 25 and 35 years old, which is approximately ten years away from reaching peak earning and consumption age, will be a key driver of retail spending.

    Retail supply per capita has been declining for the last 20 years in Australia, with 2019 the lowest year on record (0.7 sqm per capita), significantly below that in the US and Canada. The low level of new supply per capita, along with strong population growth, is supportive of the balance between supply and demand over the long term in Australia. With the decline in new retail expansion projects, and the likelihood for many projects to be scaled back or postponed, the focus will be on the conversion and repositioning of existing space in the medium term. There has already been evidence of this, with various projects deferred as many owners looked to reduce, or at least postpone, non-essential capex. 

    The market response to structural and cyclical retail changes and focus on repurposing existing space should assist in preventing cannibalisation and support sales productivity.

    Relative value has emerged in the Australian retail sector when compared to other commercial property sectors. Cap rates for retail assets across the majority of sub-sectors have decompressed over the last 18 months, whilst yields for office and industrial assets continued on a downward trajectory, reaching historical lows on a national weighted basis. Retail is now the highest yielding sector on average. Higher yielding investments are particularly attractive to income-driven investors with active management expertise to manage risks.

    Retail assets offer an attractive yield spread over the inflation-indexed 10-year government bond yield (risk-free rate). The wide spread suggests retail yields will be well supported in the event of an increase of a rise in the risk-free rate. 

    Asset value changes differ widely depending on a variety of factors, including market, location, tenant-mix, land holding and potential to covert to alternate use. Larger assets with a heavier weighting towards discretionary tenants have been more affected by temporary closures, due to both mandatory and voluntary closures. Some major institutional owners have already reported write-downs on retail portfolios of 11-15%. These falls are expected to increase over the remainder of the year, and may be up to 15-25% for larger discretionary-based assets.

    Meanwhile, assets with a stronger weighting towards non-discretionary tenants, e.g. supermarkets and pharmacies, have held up relatively well in terms of pricing and investor demand. With the majority of these tenants able to continue operations as usual during the pandemic, the percentage of rent collected was notably higher in these assets.

    The latest NAB Online Retail Sales Index shows that month-on-month growth in April 2020 accelerated to 16.2%, the highest ever monthly growth rate recorded in the series history. Australia’s e-commerce penetration rate is currently sitting at 10.4%, well below the rate in China, the United States and the UK. The importance of e-commerce was made evident during the pandemic. Retailers that were able to continue to sell products through online platforms were in a stronger position than pure bricks and mortar retailers.

    Department stores and discount department stores had announced downsizing strategies prior to the onset of COVID-19. Both Target and David Jones have accelerated the timeframe and scale of these strategies.

    Wesfarmers announced plans to fast-track the restructure of Target in late May. Up to 92 stores will be converted to Kmart, whilst up to 75 stores will permanently close. These closures/conversions will be a combination of Target Country and large format Target stores. Also in late May, Woolworths Holdings (owner of David Jones) announced they are accelerating the downsizing plans previously announced last year (20% reduction in floorspace by 2025).

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