Hallet Cove Shopping Centre sold on 6.8% yield

6 August 2021

The Markis Group have sold the Hallet Cove Shopping Centre in Adelaide amid increasing vacancies and threats from COVID shut downs.

The Centre was acquired by by local developer Antunes Group who paid $71m for the asset, reflecting a passing yield of 6.88% and a fully leased yield of 9.99%.

Hallett Cove is a triple supermarket convenience-based sub-regional shopping centre. It has close to 19,913sqm of retail space, anchored by Woolworths, Aldi and Drakes supermarkets, along with a Big W discount department store. The Centre also 1 mini-major, 55 specialties, and 7 kiosks, but has suffered in recent times with approx 25 stores (14% of NLA) vacant creating a ripple through the Centre.

The Centre sits on a high-profile corner site of 52,909sqm, with a significant 221-metre frontage to Lonsdale Road – one of Adelaide’s key north-south arterial roadways, with annual traffic of 10.1 million vehicles. The Woolworths Supermarket is highly productive with annual turnover 32% above the Urbis benchmark. The Centre has a major tenant WALE of 7.7 years representing over 65% of the total centre GLA, with leading national retailers Woolworths, Big W and Aldi on long-term leases until at least 2029.

The Centre underwent a major redeveloped in 2015/16 with some $50M of works to incorporate the Big W and Woolworths supermarket and to increase the number of specialty shops from 20 to 70, effectively tripling the area of the Centre to 18,600 square metres. Underground parking was also increased from 400 spaces aboveground to 310 underground and 650 aboveground.

Bigger is not always better and the Centre has struggled to hold to specialty tenants due to a poor design which allows shoppers to avoid large parts of the Centre. The pain in the specialty mix is also reflection of the increasing trend toward on line and e-commerce to fulfil discretionary shopping requirements.

Antunes Group has an opportunity to fix some of the design issues in the Centre and lease up the vacant areas.

According to CBRE, the Centre sits in a well-established and densely populated area, which is projected to increase to 86,700 persons by 2036 (0.4% p.a.). Average household income levels are 14% above the Adelaide metropolitan benchmark level providing retail spending of $1.2 billion including $350.1 million in the primary trade area. Expenditure is forecast to grow by 3.2% p.a., to reach $2.0billion by 2036, including $599.3 million in the Primary Trade Area.

The sale was negotiated by Simon Rooney who said “since the onset of the global pandemic, investor demand has significantly increased for defensive non-discretionary based retail assets that are anchored by major national retailers. The incoming purchaser was attracted to the strong underlying investments fundamentals, being the dominant sub-regional shopping centre within the trade area and the immediate value-add opportunities available through the strategic and targeted tenant remixing and active management “

The Centre has some good aspects with a highly visible and convent location with good entry and exit points to the car park.

The Centre layout provides convenient access to and from all parking areas to the major supermarkets however there is little to draw customers to other areas of the Centre. The Food Court malls suffers as a result of this. The travellator opposite Woolworths was a major design mistake and needs to be relocated. Two new mini Major Stores need to replace the Food Court area and the exits near the Drakes Supermarket need to be rationalised.

JLL Specialty Mall Leasing : Casual Lease Pop up lease : Hallett Cove

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