Perth Shopping Centre Changes Hands for $465m

A major regional shopping centre in one of Perth’s growth corridors has changed hands for $465 million.

Midland Gate, in the north-eastern metropolitan corridor of the WA capital, has been acquired from Vicinity Centres by Melbourne-based fund manager Fawkner Property together with private asset manager PAG.

The deal, struck on a core capitalisation rate of 6.5 per cent, represents Australia’s and Western Australia’s largest single regional asset transaction since December 2019, according to CBRE, whose Simon Rooney introduced Fawkner Property with PAG and negotiated the sale on behalf of Vicinity Centres. Colliers’ Lachlan MacGillivray was the joint agent.

The centre occupies a 14.35ha town centre site and comprises a gross lettable area of 68,600sq m ans is anchored by a triple supermarket offer—Coles, Woolworths and ALDI.

Also in the centre are discount department stores Kmart, Big W and Target and an eight-screen Hoyts Cinemas complex.

Midland Gate recently underwent a $100-million redevelopment and expansion.

“The value proposition for regional shopping centres is clearly compelling for investors, given the superior returns on offer compared to most alternative commercial property asset classes, where asset pricing levels generally remain at historic highs,” Rooney said.

“As retail fundamentals continue to reset for high quality assets and move into a clear growth phase, domestic and offshore investors are proactively re-engaging and seeking out top-end shopping centre investment opportunities such as Midland Gate, particularly being a 100 per cent interest with management rights.

▲ The Perth centre underwent a $100-million redevelopment and expansion.

“While 2023 transaction activity has been subdued to date, we expect Midland Gate to be the first of many significant transactions to close out the year and into 2024, with in excess of $1.2 billion in retail transactions currently under contract to exchange by the end of the year.”

Colliers’ MacGillivray said that WA continued to benefit from strong economic growth and higher levels of disposable income compared to the national average, as well as a relatively cheap cost of living, all positive drivers for retail demand.

This has been reflected at Midland Gate, which exhibits strong trading characteristics, with specialty sales of $11,140 per sq m and a total moving annual turnover of $510 million.

Midland Gate is the only regional shopping centre in its trade area, which is experiencing substantial population growth—the current trade area of 265,630 residents is growing by 1.8 per cent a year and is anticipated to reach 318,560 people by 2031.