Our Recent Research

Commercial Property
Rob Ellis

The Changing Face of Retail

Australia’s largest shopping centres are undergoing a significant transformation to their tenancy mix following new consumer spending patterns after the COVID 19 pandemic, according to the latest PAR Group study.
In spite of rising cost of living pressures, a number of low price-point retailers have vacated major centres, while luxury retailers have increased have become more prevalent within the same centres since 2020.

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Commercial Property
Rob Ellis

Modest Improvement In Shopping Centre Transactions Continues

The modest increase in shopping centre transactions, posted towards the end of last year, was sustained at the start of 2024. Consequently, transactions, in the three months to January, are marginally higher than a year earlier. The volume (sqm) and value of transactions remain slightly lower than a year earlier. The low number of transactions has contributed to cap rates being volatile on a month-to-month basis, continuing to oscillate between 6% to 7%.

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Commercial Property
Rob Ellis

A Subdued Year

The number of shopping centre transactions continued to edge up as the year drew to a close, resulting in them being marginally up on a year earlier. In spite of this, due to the domination of smaller assets changing hands, the volume and value of transactions, in the three months to December, remained well down on the corresponding period a year earlier. Cap rates, which were heavily impacted by the type of asset transacting through 2023, oscillated between 6% and 7%, ended the year close to 6.5%.

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Commercial Property
Rob Ellis

Some Green Shoots

The modest improvement in the number of shopping centre transactions recorded last month continues. As a consequence, transactions are well up on a year earlier, although this remains off a low base. Similarly, in the three months to November, the volume (sqm) and value of transactions, whilst modest by historical comparison, are up on a year earlier. Cap rates, even though quite erratic on a month-to-month basis, have gravitated around the 6.5% level; around 75 basis points higher than a year ago.

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Commercial Property
Rob Ellis

Cap Rates of 7%?

The last couple of months have witnessed a very modest upturn in shopping centre transactions, albeit from a very low base. Consequently, transactions are at the same level of year earlier. In spite of some large retail asset changing hands at the end of the month, both the volume and value of transactions are still well down on a year ago, reflecting the continuing bias towards smaller shopping centre outlets. Cap rates have posted large fluctuations in recent months, to be marginally higher than a year earlier, but are over 100 basis points up on the cyclical low recorded in June 22.

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Commercial Property
Rob Ellis

The Big AREIT Write-down.

A further $15 billion could be written off from the future values of Australia’s office and shopping centres assets, despite recent revaluations by Australia’s listed REITs.

Compared to asset write downs in the US and Europe, Australian listed property trusts posted only modest changes to capitalisation rates in the year to August 2023. Over the past 12 months, listed property owners have increased the cap rate of their office assets by 0.38% while, for shopping centres, cap rates have risen by 0.24%.

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