Commercial Property

Pandemic-Proof Shopping Centre Transaction Boom

Irrespective of the uncertain outlook for retail spending, large areas of the economy continuing to experience restricted physical movement, as well as numerous retail outlets closed, the surge in shopping centre transactions continued in September. Indeed, The Data App estimate the current number of shopping centres changing hands, in the three months to September, is the strongest since the transaction boom towards the end of 2017. Needless to say, both the volume of shopping centre space and the value of assets transacted are also strong and significantly higher than a year earlier.

Shopping Centre Transactions Boom

In spite of vast swathes of the country experiencing varying levels of lockdown, as well as many retail outlets closed, a very strong level of shopping centre transactions continued unabated in August. The upswing in the number of transactions, which commenced in April this year, has also seen a surge in both the value and volume of shopping centre transactions. The Data App estimate, in the three months to August, the number of transactions is over three-fold higher than a year ago, while the value of transactions, touching close to $1bn over the same period, is the highest since January 2018, thereby predating the pandemic.

Working From Home is not a Free Lunch

The move to working from home, extenuated by the COVID 19 pandemic, could have a dramatic impact on both the number of office workers and retail spending in Australia’s CBDs.
Assuming, on average, workers spend one day a week working from home, this could result in close to one million fewer office workers making the daily commute each week, which would potentially see over $700 million dollars of lost annual retail spending across Australia’s six largest capital cities. This is according to a new study by the PAR Group, an independent property research collective.

The Boom In Shopping Centre Transactions Continues For Now

Shopping centre transactions continued to boom in the three months to July, thereby maintaining the strength witnessed last month. Consequently, transactions are significantly higher than a year earlier, when Covid-19 had taken hold and activity was stalling. The latest estimates from The Data App show the average number of transactions in the three months to the end of July remained over twice as high as a year ago.

Commercial Retail Property Sales Boom

Shopping centre transactions reached a multi-year high in the three months to June, having slumped when the corona virus took hold around eighteen months ago. As the quarter drew to a close, with the corona virus apparently more under control and the vaccine rollout progressing, shopping centre transactions continued to strengthen. The latest estimates from The Data App show the average number of transactions in the three months to the end of June nearly three times higher than a year earlier.

Commercial Retail Transactions Continuing to Trend Higher

Even though the number of shopping centres transacted in May was well down from the dizzy heights posted in April, they are still up on May last year. The latest estimates from The Data App show the number commercial retail property transactions in the three months to May up over 80% compared to a year earlier, as the Covid-19 induced slump in shopping centre activity has gradually waned.

Surge in Shopping Centre Transactions

Commercial retail property transactions in the month of April were the highest since October 2018, as some larger shopping centres were offloaded, while the demand for neighbourhood and large format centres remained solid. As a consequence, the latest figures from The Data App, show the number of transactions in the three months to April were up over 60% compared to a year earlier, while the value of transactions, at over $0.5 billion, is more than double for the same period a year ago.

Cap Rates Continue to Decline in Subdued Commercial Retail Market

A year ago, as the first wave of the pandemic hit, Australia embarked on a lockdown which was to last until the middle of May. Additionally, many states and territories have closed their borders at varying times, while there has been extended periods of social distancing. Although some essential retail spending benefitted from panic buying other, non-essential spending in shops was crimped by a combination of temporary/permanent shop closures and a sharp uptake in on-line spending.
With uncertainty surrounding the length, duration and impact of the pandemic, shopping centre transactions started to taper away, reaching a low around the middle of 2020.

Commercial Retail Transactions Picking Up

Following a lull in trading activity during January, shopping centre transactions strengthened during February. Whilst the number, as well as the square metres, of shopping centres changing hands in the three months to February is lower than the same time last year, it is considerably stronger than the lows posted during 2020.

Some Retail Assets Continue to Transact

Investment activity for Australian commercial retail property was modest in January, and follows the spike in the number of transactions towards the end of last year. Whilst there is a high degree of volatility, and transactions are well down on a year earlier, they are, nevertheless, close to their long run trend.