ASX-listed Newmark Property REIT has bought a large format retail complex in the Brisbane suburb of Underwood for $57 million.
The property was 99% leased to tenants including Officeworks and Supercheap Auto, with a weighted average lease expiry (WALE) of 6.3 years and average rental increases of 3.1% per annum.
The 2.8-hectare property at 1-17 Compton Road had four buildings with a combined lettable area of 11,115 sqm.
It was adjacent to a recently built Bunnings store in Underwood – about 20 kilometres southeast of the Brisbane CBD.
“The property is a high-quality property that is located on a significant land holding on the corner of two arterial roads in a sizeable catchment area and underpinned by leading national retailers,” Newmark Capital Joint Managing Director Chris Langford said.
“We believe that this combination of underlying real estate and tenancy mix provides for a high-quality long-term investment.”.
The deal will increase the REIT’s portfolio to nine properties totalling about $620 million, as well as enhancing the portfolio’s geographic diversity.
Recent Brisbane retail deals include the sale of the Riverlakes Village neighbourhood shopping centre in Cornubia for $17.4 million in May.
An EG fund bought a half stake in the Grand Plaza shopping centre in Browns Plains from Invesco in March, while Centuria Capital Group acquired a $202 million retail precinct within a major mixed-use development in Brisbane’s West End.
According to Colliers research, the large format retail sector continued to perform well in the second quarter of 2022, boosted by strong household savings demand from consumers.
Continued working from home and a reduced supply in the residential market boosted key large format categories with many outperforming broader retail sales growth.
Colliers said large format retail had been one of the most resilient retail asset classes through the pandemic, along with neighbourhood centres.
However, there were challenges ahead with further interest rates rises over the second half of 2022 and into 2023 set to cool the housing market and weigh on household spending.