Weekly Update 11/10/2021

Welcome to this week’s Property News.

Regional Shopping Centres were the big news this week with 3 major deals completed in the sector worth $664m.

The first announcement was from Elanor Investors who are set to acquire Warrawong Plaza for $136m. The 43,300sqm Centre is anchored by two supermarkets (Coles and Aldi), two discount department stores (Big W and Target), Hoyts Cinemas, 9 Mini Majors along with 66 specialty tenants including 3 pad sites. Elanor’s strategy is to remove one of the DDS stores and introduce a 3rd Supermarket and re-position the Centre as a non discretionary and e-commerce fulfilment space for the local catchment. Elanor has established a single asset wholesale fund for the acquisition and are seeking to raise $82m for the investment.

The 2nd deal was the $128m acquisition of a 50% interest in Runaway Bay by Greenpool Capital & Qualitas. The Centre, managed and co-owner by Vicinity comprises Coles, Woolworths, Big W, Target and Aldi, three mini-majors, 92 specialties, 15 non retail & 15 other retail tenancies with a total NLA of 43,000sqm.

The 3rd deal is the potential sale of GPT Wollongong Central to Haben Property Group for $400m. The Centre is a much larger Centre with 212 tenancies across 4 interconnected buildings and comprises 55,000sqm of NLA anchored by David Jones, Coles, Target and H&M together with over 2,100 car spaces. The Centre offers a range of development opportunities and whilst Haben are waiting to hear from Haben on their acquisition, a remix and redevelopment strategy is on the cards.

Retail is expected to be a big winner as communities come out of lock down and in the lead up to Christmas and whilst we are generally negative toward regional shopping centres due to the high proportion of discretionary expenditure and the threat of online retail, we have often indicated that pockets of opportunity will emerge at the right price.

We feel Elanor’s acquisition and investment strategy for Warrawong Plaza hits the mark.

Interestingly also this week, Westfield and Vicinity announced two new strategies to transition to the new world.

Vicinity have began installing drone delivery services from the rooftop of Grand Plaza shopping centre in Logan. The service allows customers to order from the centreโ€™s participating businesses receiving deliveries in minutes.

Westfield have also enhanced their omni-channel approach to retailing with the rollout of of Westfield Direct which extends the in-centre experience by enabling customers to purchase from multiple Westfield business partners across any Australian centre, in one online transaction. Customers can Click and Collect from the Westfield Direct service desk at their local Westfield or choose home delivery.

Large Shopping Centres have always evolved and the next 5-10 years will see significant changes to the way Centres deal with the impacts of online shopping. Centres will continue to offer services to entice customers into the Centre, ways to make shopping much more of an experience, and ways to remove the mundane parts of the trip.

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Until next week

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About Warwick Petschack

Warwick has over 25 years of property investment and management experience. Principally responsible as Managing Director for Capital Management Australia and Joint Managing Director for Chauvel Capital Partners and Editor of Australian Property Markets News.

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