Queensland buyers take riskier retail route
Investors in Queensland’s retail market are showing an increasing willingness to take on more risk, with more than $30 million in retail development deals finalised by CBRE in recent weeks.
In one of the most recent transactions, Engage Capital, in partnership with Evans Long, reached an agreement to sell the Augusta Village shopping centre in Ipswich to a private investor in a fund through development deal valued at $10.8 million.
It is the Engage Capital/Evans Long partnership’s second such deal in as many weeks, following the sale of the Calliope Shopping Centre, 20km south-west of Gladstone, in an $18 million fund through development deal.
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CBRE’s Nick Willis and Michael Hedger negotiated both transactions, in addition to a third deal involving the sale of a DA-approved shopping centre site in Caboolture.
The neighborhood shopping centre deals come hot on the heels of a report by Herron Todd White that indicated a number of the state’s larger regional cities, including Rockhampton, Hervey Bay, Toowoomba and the Sunshine Coast, are starting to recover from the market downturn.
We are finding with the continued increase in competition in the neighbourhood shopping centre market investors are moving up the risk curve
Meanwhile, Queensland is expected to dominate retail property sales activity this year, alongside New South Wales, with Queensland recording $1.1 billion of sales in the first six months of the year, including 10 deals worth a total of $835.4 million.
“We are finding, with the continued increase in competition in the neighbourhood shopping centre market, investors are moving up the risk curve and exploring fund through deals and development opportunities,” Hedger, CBRE’s manager of retail investments, says.
The Augusta Village deal involved the sale of a development site on Leon Capra Dr, in Augustine Heights, 35km south-west of the Brisbane CBD.
Augusta Village will include specialty shops and a 15-year lease to IGA
A private investor acquired the 6101sqm site and will progressively fund the construction of a 1645sqm convenience centre under a development management agreement.
Hedger says the expressions of interest campaign fielded more than 60 direct inquires, and the buyer exchanged unconditional contracts the night before the close of the campaign at a price that reflects a yield on completion of 7.42%.
IGA has committed to a 15-year lease to anchor the centre.
“The centre offers a secure income stream from national and local retailers and appealed to investors looking for strong depreciation benefits and significant acquisition cost savings,” Willis says.
The Calliope Shopping Centre was a similar deal, although in that instance the transaction was to fund a significant expansion of the existing anchor to become a full line, 2422sqm supermarket on a brand new 20-year lease to Drakes Supa IGA.
While the centre has a current net income of approximately $900,000, the redevelopment is projected to deliver a fully leased net income of $1,540,000 on completion – representing an equivalent yield of around 8.5%.
CBRE has also sold a 17,140sqm, DA-approved development site in Caboolture, north of Brisbane, to a private investor for $3 million.
The corner site, located at 1 Ardrossan Rd, has approval for a 3000sqm supermarket, supported by a drive through facility and 790sqm of specialty retail.
