Last week, Ryan Chandler and Stewart Gilchrist brokered the off-market deal at Crestwood Plaza, located at 458 Olsen Avenue, Molendinar on the Gold Coast. The 1.22-hectare site anchored by SuperSpar Supermarket was taken to market during 2018 and 2019 with competing agencies but failed to sell. The neighbourhood shopping centre faced leasing risk associated with the then anchor tenant Spanos IGA, who left at the end of their lease term.
Colliers Value Add Strategy
Through strategic retail leasing, Ryan negotiated an off-market lease to a new anchor tenant SuperSpar Supermarket on a 10-year initial term. The corporate flagship store alleviated the risk associated with the neighbourhood centre’s major tenant, which accounted for 37.9% of the asset’s NLA.
Following the addition of a new low risk anchor tenant, Ryan was able to reduce the balance of the vacancy by introducing a new tenant Crestwood Family Dental. This absorbed a further 150m2 at a rental rate of $702/m2 gross + GST on a 7 year initial term, increasing the centres investment appeal.
Ryan’s understanding of tenant requirements and specific purchasing criteria from active investors led to significantly improving the asset by way of increasing occupancy, income and the leasing W.A.L.E. This impressed the Vendor so much so, that they entrusted him to sell the asset.
The private Adelaide-based property company, were preparing to re-launch an on-market campaign with Colliers International exclusively, however an off-market offer was fielded, and a deal was struck at $17.55 million reflecting a current passing yield of ~6.9%.
Current Market Conditions
The retail investment market is currently starved of neighbourhood centres, and as such, investment opportunities of this size are quickly being absorbed at compressed sale rates, due to the lack of stock being offered to market.
Colliers International are receiving strong interest nationally, from savvy investors seeking to acquire assets of this calibre before they enter the market.
We anticipate there to be a flood of retail investment opportunities entering the market in the first half of 2021 as neighbourhood centres are stabilizing and strengthening following the retail uncertainty that COVID-19 brought.