Mixed-use retail values boosted by surging residential development: Cushman & Wakefield

Mixed-use retail assets continue to find favour with investors, most recently evident from the ongoing auction campaign to sell two lots in Sydney’s Inner West, say Cushman & Wakefield.

Located at 270 Liverpool Road (pictured above) in Ashfield’s retail strip, the lots comprise two brand new strata retail stores tenanted by ANZ Bank and Chemist Warehouse.

According to Cushman & Wakefield, the strong interest in the upcoming auction for the two lots has been driven primarily by high net worth individuals and family investors, both from the local area but also interstate and overseas. These investors are attracted to the long term capital growth presented by the retail sites.

With the rise in medium and high density housing, there has been a significant effect on the way we work, shop and live, say Cushman & Wakefield.

This is also driving experiential and mixed use retail as retailers look to meet the challenge from online shopping.

Demand for mixed use retail and lively high streets storefronts are, in part, also in response to increasingly compact living spaces that are impractical for entertaining.

For developers, the mixed use retail component of a development can generate significant returns, and margins can be increased through maximising the retail pricing and refining their strategy.

“With an apartment tower and space below you effectively create a vertical community,” says Cushman & Wakefield’s head of Research Dominic Brown.

“The retail offers more than convenience; the right tenant emphasises that local village atmosphere and occupiers buy into the concept of a café where the barista knows their order, or bank where the teller knows their name.

“The natural solution for residential adjacent retail is convenience retailing, however, any business offering something the internet can’t is ideal. An experience or service element which is not appealing or available for online purchase will be well received by any resident.”

The two lots going to auction on December 5 reflect this trend.

Lot 1 is occupied by Chemist Warehouse, which is on a new 10-year lease to 2027 plus options to 2037.

The net income from the property is $434,687 per annum plus GST.

The net lettable area is 789 square metres.

Lot 2 is lease to ANZ Bank which is on a seven-year lease to 2023 plus options to 2033.

The net income from the property is $253,838 per annum plus GST.

Its net lettable area is 274 square metres.

Both properties have 4% annual increases.

The listing agent is Anthony Bray.