Large-format retail centre in Victoria's Sunbury fetches strong yield of 6.5%
A large format retail centre in Sunbury, Victoria has sold for $14.88 million through CBRE.
The Sunbury Showrooms was a former Bunnings store that was converted to a large format retail centre in 2014.
An offshore Chinese group snapped up the suburban Melbourne centre, with the sale price representing an initial yield of 6.52%, according to a media release.
According to CBRE Victorian Retail Investments, the sale set a new yield benchmark for large format retail centres in Victoria and follows CBRE’s $35 million sale last year of the Rocklea Homemaker centre on a yield of 7.7%.
Local Victorian developers H.Troon appointed CBRE’s Victorian Retail Investments team to market the property through an expressions of interest campaign.
The Sunbury Showrooms has a total lettable area of 5,554 sqm and has six homemaker tenants, such as The Good Guys, Godfreys, Petstock and Repco.
The selling agents were Justin Dowers, Chris Parry and Kevin Tong.
“The result we have achieved for Sunbury Showrooms has set a new benchmark yield for large format centres in both Victoria and Australia, with yields previously sitting above 7%,” Dowers said.
He added that the limited supply of investment grade retail properties on the market was leading to further yield compression for blue-chip retail assets across the board.
Dowers also noted that heightened confidence in the large format retail market and the associated lease covenants was helping to drive significant yield compression in this market segment.
“The sector is typified by long initial lease terms and fixed annual increases, which are very attractive to investors at the moment,” Dowers said.
