Retail property investors have further demonstrated their confidence in the Melbourne retail sector with the sale of the Aston Square Shopping Centre development site for over $11 million to an interstate developer, representing a rate of $350psm.
The Aston Square development site is a permit approved land parcel in Craigieburn, approximately 35km north of the Melbourne CBD and with a precinct structure plan approved site for a 6,700sqm shopping centre.
This sale represents the first neighbourhood shopping centre development site sold in 2016 following the sale of Delacombe Town Centre late last year for $20 million to local builders H. Troon.
CBRE’s Victorian Retail Investments team, comprising Mark Wizel, Justin Dowers and Kevin Tong, negotiated the sale on behalf of the vendor, WA based developer Peet Limited.
Director Justin Dowers said, “During the campaign we noticed not only known developers but also an increased number of retail property investors, who due to the lack of available shopping centres available for sale on the market were turning to shopping centre development as a way of holding these assets.
“As the yields for built neighbourhood shopping centres continue to compress, the value for retail development sites are increasing substantially, very similar to what has been experienced in the residential site market over the last five years."CBRE State Director Mark Wizel said the sale of Aston square demonstrates the ongoing keen interest that buyers both local and offshore have for retail sites. “Asian developers are beginning to move into the retail development site space, which we witnessed in Aston Square, as a diversification strategy away from pure residential, especially developers from Mainland China and Malaysia.”
Mr Dowers said, "There was no pre-commitment from a major tenant however the bidders took comfort in the high population growth that Craigieburn is experiencing."“Private and institutional developers are becoming more active in the retail development space, which was previously dominated by the major supermarkets, as lenders are having a greater interest in funding these retail developments,” Mr Wizel said.
The campaign was keenly contested with eight offers registered at the close of the expressions of interest process.
Mr Dowers said the appetite for retail development sites was being aided by declining vacancy rates, rental growth (national average 1.2%) and supermarket sales growth (national average 2.6%). These fundamentals have propelled retail to become the most attractive asset class in 2016.
“Across the retail sector tenant demand continues to be strong relative to the limited supply in the market which has led to record low vacancy rates, with Melbourne being only 2.5% vacant. When coupled with the increasing retail spend of consumers we have a market which is underwriting the demand for more retail developments across the board.”