Half share in Sunshine shopping centre up for grabs

A 50% stake in the Sunshine Marketplace shopping centre has hit the market with private investors, developers and syndicators tipped to be among those vying for a share in the retail property.

The 34,215sqm shopping centre in Melbourne’s western suburbs has anchor tenants in Woolworths, Big W and Village Cinema and it is valued at $128.8 million.  Investment firm Challenger owns part of the asset with Vicinity Centres, who also manage the property. Vicinity will retain 50% ownership.

The sub-regional shopping centre, which first opened in 1997, has over 50 tenants including JB Hi-Fi, Priceline and Food Star and it is 750 metres from the Sunshine train station.

JLL’s Nick Willis who is handling the sale with colleague Same Hatcher said the 50% stake on offer would appeal to a wide range of buyers.

“These opportunities are unique and typically reserved for larger institutions, however the price point of Sunshine Marketplace opens this opportunity up to private investors, developers, managers and syndicators,” he said.

Some investors may relish the opportunity to partner with market leading retail manager Vicinity, Mr Willis said.

Neighbourhood shopping centres have been highly sought after by investors during the pandemic, as more people were forced to shop locally at daily-needs based retailers such as major supermarkets.

Woolworths, Big W and Village Cinema are the anchor tenants. Picture: realcommercial.com.au/for-sale

The centre occupies 28% of the property and included in the sale is 12.22ha of freehold land with DA approval for an entertainment and leisure precinct, with an 84 key serviced apartment building. There is also DA approval pending for a separate ten storey office building with 13,000sqm of net lettable space.

The property could be substantially expanded over time as it controls the “largest landholding in Sunshine” according to Mr Hatcher.

“Whilst the property is currently operating as a high performing convenience-based shopping centre, it is underpinned by the underlying significant landholding.

“The ability to acquire over 12 hectares of freehold land adjoining a major train station in Melbourne is unprecedented.  The centre will evolve into a true mixed-use development over time, which is simultaneously being supported by surrounding planning changes and major infrastructure development,” he said.

The sale includes over 12 hectares of freehold land. Picture: realcommercial.com.au/for-sale

The sale comes at a time when transactions in retail properties in Victoria are down significantly compared to the same period last year, and are below the average seen over the last five years, according to PropTrack economist Anne Flaherty.

“As at the second quarter of 2022, Victorian shopping centre assets were averaging yields of 5.35%, according to CBRE research,” Ms Flaherty said.

“Sub-regional centres have been outperformers over recent years and have seen significant yield compression over the last 12 months. Driving the success of these assets, increased risk in the retail sector is leading more investors to target assets anchored by lower risk, non-discretionary retailers such as supermarkets.”

Ms Flaherty said the centre’s location in a key population growth area in Melbourne would be more likely to attract local investors.

“Due to the complexity involved in managing sub-regional centres, this asset is likely to be targeted by local investors. The exception would be offshore buyers who are looking to partner with a domestic group who can provide local insights,” she said.

“The location of this property in one of Melbourne’s key population growth corridors is another boon for the asset, which is likely to see foot traffic rise over the coming years.”