AsheMorgan has bought the Homemaker Prospect retail centre in Sydney from Dexus for $78.9 million, as investors continue to scoop up Large Format Retail (LFR) centres across the country.
The 26,000 sqm retail centre had 28 showrooms occupied by brands including Fantastic Furniture, The Good Guys, Snooze, Beacon Lighting and Bing Lee.
It was located in Prospect, about 32 kilometres west of the Sydney and said to be one of the fastest growing catchments in the country.
The deal comes after AsheMorgan sold the Crossroads Homemaker Centre in Sydney to LaSalle Investment Management for $282 million last month.
JLL’s Nick Willis and Sam Hatcher sold Homemaker Prospect on behalf of Dexus, who acquired the stake for $64.2 million in 2019.
“The Large Format Retail sub-sector performed exceptionally well recording the most significant yield compression across all retail sub-sectors in 2020 and 2021 with yields tightening by 105 basis points between the end of 2019 and the final quarter of 2021,” Hatcher said.
JLL Research found that pandemic-induced lock downs and travel bans had been a significant tailwind for the sector, as household goods spending remained elevated at 31% above pre-pandemic levels.
JLL’s Head of Capital Markets Research Andrew Quillfeldt said the acceleration in spending was primarily driven by strong renovation activity and a sharp increase in demand for home office furniture and equipment, with consumers spending almost $1.4 billion more a month than pre-pandemic.
“Given strong consumer spending in the sub-sector, leasing demand has remained robust,” Quillfeldt said.
“Major LFR retailers have continued to remain optimistic with NCK expecting to open a minimum of six new stores nationally in FY23; two Nick Scali stores and four Plush stores.”
Willis said three of the five largest retail transactions completed in Australia in 2022 had been Large Format Retail assets.
“These have included more recently the sale of Crossroads Homemaker ($282 million), Homeworld Helensvale ($265 million) and Alexandria Homemaker ($200 million) sold to Goodman for last mile conversion,” Willis said.
“The sale of Prospect Homemaker takes the total LFR sales volume for 2022 to a five-year high and reflects the intensified demand for LFR assets because of the category’s resilience over the past two years.
“JLL has transacted over $750 million worth of Large Format Retail assets in 2022.
“Through this, we have seen a structural shift in the investor base attracted to both the sub-sector’s investment fundamentals, as well as also considering their alternative use potential.”