Commercial Property

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.

Value Investors Go Shopping

After dwindling through the course of 2020, investment activity in Australia’s commercial retail property market picked in November and December, according to the latest findings from The Data App. Even though the number of transactions, on three-month average, remains well down on a year ago, December posted a marked upturn. Consequently, transactions are currently close to their long-run average.

Shopping Centre Transactions Improve

Investment activity in Australia’s commercial retail market picked up during November. While the three-month average is well down on a year ago, the month of November recorded the highest number shopping centre transactions for the year. Transactions were dominated by large format and convenience-based stores.

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Record growth in online spending, brought on by the COVID 19 pandemic, could see 20% of current sales in Australia’s largest 31 shopping centres move online. As a result, asset values could potentially fall in the order of 30%, according to a new study by the PAR Group.

Commercial Retail Property Transactions Continue to Slide

With Victoria moving into a state of emergency in August, the impact of Covid-19 on the retail sector became increasingly more onerous. With both the inability and lack of desire in many cases to physically shop, on-line shopping has continued to take an increasing share of retail spending. The uptake in on-line shopping has resulted in Sydney letter deliveries being reduced to every other day.