Tenant Leasing Group (TLG)

Retail Market Breakdown - 1st June 2018

Bellarine Village Shopping Centre, Newcomb, Victoria.

Welcome to our second ever Retail Market Breakdown for the beginning of June, 2018!

We’ve scoured retail business & property news, research reports & forecasts in order to provide relevant & concise analysis of key themes, growth trends & deals done in retail. It’s a 4 minute market summary that we hope is relevant & useful.

Western Sydney ‘Aerotropolis’ Gets $20bn Funding Boost

Airport ‘City’ at Badgerys Creek gets $20bn Funding Boost from Federal, State & Local governments. It’s called an ‘aerotropolis’ because the extensive planned infrastructure and economic activity will all be centred around the airport. The 10,000-hectare, carbon neutral development will become a world-class living and working precinct, with a retail areas, office buildings, entertainment and leisure facilities, a conference and exhibition centre, an innovation centre for start-ups, and residential space. The project could create up to 120,00 jobs in the region in everything from education and health to transport, logistics and services. For retailers, the rapid connectivity to suppliers and customers – both within Australia and worldwide – should help with efficiency and fulfillment. Read the full article.

$33 billion Westfield deal gets green light from shareholders

Westfield will be taken-over by Paris property giant Unibail-Rodamco, but the deal excludes shopping centres in Australia and New Zealand, which will remain under control of a separately listed entity Scentre Group. Read the full article.

Scramble to clear winter stock kicks off for Myer, DJs

Myer and David Jones (DJS) have pulled the trigger on their mid-year clearance sales, kicking off a month of intense discounting. While the stocktake sale is a staple of the Australian retail calendar, both department stores are trying to make up for a warm start to winter – and a financial year marred by impairments and leadership changes. Launched on Tuesday, both department stores have slashed up to 70 per cent off thousands of products – with Myer launching a series of two-day offers, including 40% off Bonds, Piper, Reserve and its own Blaq brand, while DJs has taken 30–50% off brands including Camilla and Marc, Rachel Gilbert and Tigerlily. Slow moving winter stock is the priority. Read the full article.

Retail Food Group appoints new chief to lead transformation

Scandal-plagued RFG have promoted their Australian boss to lead a group-wide transformation over the next 12-18 months. The strategic review will include improving the performance and sustainability of the franchise network, simplifying operations and supply chain, a customer loyalty program, and improving product range and quality. After recording an $88 million interim loss in March, they’re pinning their hopes on a pivot towards customer-centricity (which mirrors the direction taken by resurgent US retailer Best Buy, with their new personalised advice service), innovation and transparency with their franchises. A part of this is delivering franchisees reduced cost of goods, renewal and store fees. Read the full article.

Local investor buys Bellarine Village Shopping Centre for $36.5m

Bellarine Village Shopping Centre has been purchased for $36.5 million by a private Melbourne-based investor. This adds to the whopping $420 million splashed out by investors in regional Victoria over the past 12 months, on retail and commercial property investments, a 29 per cent increase over the previous corresponding period. The 10,443sqm (GLA) neighborhood centre is anchored by Woolworths (with a 25-year lease) and Dan Murphys (15 years) and has other 16 specialty retailers including The Reject Shop (with a five-year lease), Safeway Petrol Plus (five years) and Hungry Jacks (15 years), returning an estimated $2.3 million per annum. The 2.3 hectare site, which has four street frontages, four access points and provides parking for 315 car, was sold on a passing yield of 5.8%, with 4 vacancies. The mall was offered for sale by Mark Wizel, Mr Dowers, Kevin Tong and Joseph Du Rieu of CBRE, who said the result showed the resilience of non-discretionary retail property amid over-hyped concerns about the growth of online retail giant Amazon. Dowers also cited strong economic fundamentals in regional areas, and population growth forecasts for Geelong & the Bellarine peninsula in particular (expected to grow by 32 and 36 percent respectively, by 2036) as creating the “sort of catchment which underpins the most successful neighbourhood centres.” Neighbourhood centres in these areas are trading at similar returns and pricing levels to metropolitan Melbourne. Read the full article.

That’s a wrap for this month. Feel free to share or forward on to colleagues and friends.

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Phil Reichelt

Founder & Principal, Tenant Leasing Group (TLG)

Phil leads TLG with 25+ years experience as a property advisor & tenant representative in Australia and New Zealand.

He specialises in multi-site retail, mixed-use office & industrial, and warehouse leases of up to 5,000sqm.

Trusted by clients, Phil negotiates competitive rentals, incentives, and favourable lease terms for retailers, eCommerce, legal, financial services, and other commercial occupiers.

Specialist advice on warehouse, multi-site retail, office & industrial property in Australia.