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Small investors defy market jitters as big end deals retreat

RCA’s managing director for Asia Pacific David Green-Morgan said the lockdowns in New South Wales and Victoria have hit commercial landlords doubly hard.

“Office and non-grocery retail rentals have dried up with non-essential businesses not allowed to operate, while a moratorium on the eviction of financially distressed commercial tenants has hampered landlords’ ability to repurpose their properties,” Mr Green-Morgan said.

“This might explain why mainly logistics and student housing properties have been trading of late.”

At the smaller end, while retail is doing it tough, there are signs emerging of deals in the sector with a focus on the food-anchored neighbourhood centres as consumers opt to work and shop closer to their home.

Development sites are also being viewed with gusto to garner longer-term revenue opportunities.

One of the latest being offered is at 104-108 Church Street, Parramatta. No price was given but similar properties have sold for about $20 million.

The 1067 sq m site sits on a total 4115 sq m net lettable area, and is being marketed by Ray White Commercial Western Sydney senior sales executive Jai Sethi, principal Peter Vines, associate director Victor Sheu and director Joseph Assaf.

“Parramatta is absolutely thriving, with Parramatta Square coming on really well, and the recent announcement of Sydney Metro West as well as the light rail on its way, there are always keen investors looking at getting into this market,” Mr Vines said.

Primewest paid $34.75 million for the Woolworths Spring Farm Shopping Centre.

Primewest paid $34.75 million for the Woolworths Spring Farm Shopping Centre.

The offering also comes off the back of the sale of 2-4 Palmer Street in Parramatta for $8.5 million by Ray White Commercial – Metropolitan Sydney in conjunction with Khoury & Partners.

In the midst of the pandemic, Colliers International’s agents have transacted 15 small to medium retail assets (being an individual asset worth more than $15 million and less than $75 million) valued at a combined $400 million, from the beginning of 2020. A majority were off-market transactions.

James Wilson, national director, retail investment services at Colliers International, said supply for on market investment opportunities are likely to remain relatively constrained in the short term.

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“However, a combination of factors including low cost of debt, a fluctuating share market and strong performance of supermarket and hardware operators has resulted in renewed syndicator investor appetite, with a key focus on non-discretionary retail investment opportunities anchored by major supermarket operators and ASX-listed covenants,” Mr Wilson said.

“Middle market retail investments’ popularity has continued to grow during testing conditions given the combination of the centre’s income profile, security of income through long leases to ASX listed tenants together with their large strategic land holdings being very attractive for generational investors.”

Mr Wilson said sales included a portfolio of assets held by Woolworths, including the Spring Farm Shopping Centre, in Sydney’s south-west, Coles, Altis, Stockland and the Kaufland National Portfolio.

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