Woolworths and ISPT have chalked up some big deals this year as they position themselves for a retail rebound in 2025.
The transactions come amid strengthening investor confidence, with retail investment volumes reaching $6.6 billion in the first nine months of 2024, marking an 80 per cent increase from the same period in 2023, Savills research shows.
According to the latest Savills Retail Investment report, transactions of more than $10 million during the third quarter totalled $2.2 billion, with institutional investors leading acquisitions at 50.7 per cent of transaction value.
Major deals included Vicinity Centres’ $420-million acquisition of a half-stake in Lakeside Joondalup and Scentre Group’s $174.75-million purchase of a 50 per cent share in Westfield West Lakes.
The sector’s outlook appears positive, with NAB’s Third Quarter Commercial Property Survey projecting retail vacancy rates to tighten to 5.8 per cent over the next 12 months, while Deloitte forecasts retail growth to reach 1.5 per cent in 2025 and 2026.
Also this quarter, Woolworths aquired Plumpton Marketplace, 45km west of Sydney, for $180 million, representing a net passing yield of about 6 per cent.
The 18,000sq m centre, which includes Big W and 58 specialty stores, sits on a 5.82ha site with 930 car spaces. The acquisition comes as competing supermarket chain Coles seeks approval to develop a neighbouring site with Kmart as a planned tenant.
Woolworths exercised its first right to buy Plumpton Marketplace under its lease agreement, which has 10 years remaining.
The property, renovated two years ago, was previously owned by TCorp, a NSW public sector fund managed by Lendlease, which acquired it for $136 million in mid-2022.
This transaction follows Woolworths’ purchase of Niddrie Central in Melbourne’s Essendon area for $51 million, further highlighting the retailer’s strategy to secure key locations across major metro markets.
In a parallel move, Woolworths’ development arm Fabcot divested a new centre at Clarkson, 35km north of Perth, to ISPT Retail Australia Property Trust for $35.75 million.
The sale represents significant value creation for Fabcot, which acquired the land for $14.5 million in mid-2021. The 6466sq m complex includes The Reject Shop and other specialty retailers across a 2.7ha site.
Located 35km north of Perth, the centre services a trade area of 81,275 people, which is expected to grow to 95,000 by 2041.
ISPT Retail Australia Property Trust (IRAPT) has also strengthened its $2.5-billion portfolio with two significant acquisitions—Clarkson and a move to full ownership of Mornington Central in Victoria through a private sale with Vicinity Centres.
1 of 2
The 11,474sq m centre includes Woolworths and Coles as anchor tenants as well as 29 specialty shops and 10 kiosks. The centre has a $108.6-million rolling annual turnover.
IRAPT fund manager Kate Mathewson said the “acquisitions are a testament to ISPT’s strategic approach to capital recycling, allowing us to invest more in assets that meet the needs of the communities they serve but also align with IRAPT’s long-term growth objectives”.
According to ISPT, IRAPT now manages more than 50 assets.
The Savills report said these transactions highlighted a shift in market sentiment towards the retail sector’s long-term growth potential, as “investors strategically reweight portfolios, fund developments, and leverage asset re-pricing … in anticipation of sustained rebound in activity by 2025”.
Knight Frank chief economist Ben Burston said a “return to income growth, with an improvement in leasing spreads and MAT levels, is also persuading more investors that the sector has been resilient through this period of consumer weakness and offers long-term growth potential as the economy recovers”.
