The Great Retail Yield Divide

The uncertain role of sub regional centres in the evolving Australian retail marketplace, post the COVID 19 pandemic, is highlighted by emerging yield spreads across retail assets according to a new study by the PAR Group.

Shopping Centre Transactions Remained Weak in October

Even with the lifting on some domestic travel restrictions and the opening up of Victoria, economic and financial uncertainty continue to weigh on the retail sector. In particular, it is unclear how consumer spending will react to the paring back of personal and business subsidies, how some retail businesses will survive, let alone their willingness or ability to pay rent. To all this can be added the reduction in footfall being experienced in city centres which is crimping trade in inner city stores.

Shopping Centre Transactions Down Nearly 50%

With tighter mobility restrictions only slowly being lifted in Victoria, the impact of Covid-19 has continued to weigh heavily on both the commercial retail sector and the wider economy in general. So, with restraints on physical movements coupled with the health incentive to stay at home, on-line shopping has continued to fill the void.
Consequently, in some areas of the country it has not been possible to market assets, while the temporary closure or shutdown of some stores has made valuations virtually impossible, thereby crimping transaction activity. This has meant transactions are significantly down on a year earlier but have improved marginally from the previous month.

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.

Shopping Centres on Life Support

The Data App (TDA), a member of the Par Group, has released its shopping centre transactional insights for the March quarter 2020. Commercial retail transactions fell away through the March quarter. According to TDA estimates, both the value and volume of shopping centres transacted in the March quarter 2020 was the lowest for three years.