CBD Retail Transactions On Track For Another Record Year

TH Real Estate has agreed to acquire a one third interest (33%) in the iconic Myer Melbourne flagship department store on Bourke Street Mall in the CBD on behalf of TIAA, for a purchase price of $151.3 million.

The sale was negotiated by JLL’s Simon Rooney on behalf of Myer family Investments in an off-market sale process.

Myer Melbourne is one of the largest department stores in Australia, just under 40,000 square metres over nine floorsIt is a historically significant structure having been constructed and operated as a flagship department store since 1914.

This sale adds to the sale of the David Jones building at 77 Market Street Sydney for $360 million in August 2016, a 75% interest in MidCity Centre, Sydney for $320 million in May 2016, a 50% interest in World Square, Sydney for $285 million in December 2015, Rundle Mall and 80 Grenfell Street in Adelaide for $400 million in December 2015 and Myer Centre Adelaide for $288 million in May 2015.

JLL Head of Retail Investments, Australasia Simon Rooney sees the high level of CBD retail investment activity continuing over the remainder of 2016 as owners seek to trade out of passive stabilised assets to redeploy funds into other investment and development opportunities.

“JLL has recorded approximately $1.1 billion in CBD retail transactions in 2016 year-to- date, which suggests we are on track to surpass the previous record of $1.2 billion reached in 2015.

“There is still very robust demand from investors who are seeking to acquire major CBD retail assets given their defensive nature and potential to generate solid income growth through increased population density, infrastructure improvements and employment growth,” he said.

“In particular, Melbourne is expected to continue to experience strong population growth, having already overtaken Sydney in the rate of population growth and projected to be the first Australian city to reach 8 million residents.

“We continue to see offshore investors being very active in the Australian market. The inflow of offshore capital into retail assets reached a record high in 2015, with acquisitions of $2.5 billion across all shopping centre categories.”

Approximately $1.5 billion of retail assets have been acquired by offshore parties in 2016 year-to- date.

“Investors continue to lower their return expectations for core assets which is resulting in further yield compression.

“The sale of Myer Melbourne continues the trend of very significant yield compression for core CBD assets … reflecting one of the most competitive yields ever paid for a major retail asset in Australia,” said Mr Rooney.