09/01/2007 - 22:00

Industrial, retail bloom in boom

09/01/2007 - 22:00

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While the state’s residential and commercial markets were strong performers in 2006, positive sales results were also emerging in the industrial and retail sectors.

Industrial, retail bloom in boom

While the state’s residential and commercial markets were strong performers in 2006, positive sales results were also emerging in the industrial and retail sectors.

The biggest deals of the year were brokered with supermarket giants Coles and Woolworths. The largest of these was the $155 million deal signed in September by Charter Hall for the leasehold development of Coles’ new 72,834 square metre distribution centre at the Perth Airport Business Park.

The second largest sale was part of a national portfolio of Woolworths Distribution Centres, for which unlisted commercial property manager SAITeysMcMahon paid $82 million on a leaseback.

Savills Research estimates a total of $782 million worth of industrial property sales valued at more than $1 million were transacted in 2006, up 36 per cent from $574 million in the previous year.

The agency noted off-market campaigns had been particularly popular with smaller funds and syndicates in search of top prices.

Shortages of industrial land, particularly large parcels, resulted in land sales of $1 million and above accounting for just 13 per cent of the total stock sold.

Burgess Rawson managing director Andrew McKerracher said 2006 was a year of solid industrial sales and record rental growth, with continuing growth expected this year.

Mr McKerracher said industrial land had become a rare commodity and believed the market would readily absorb a number of new estates soon to be released in Bassandean and Cockburn.

Retail remained a highly sought-after investment asset last year, reporting some of the strongest retail turnover growth in the country as yields continued to be squeezed.

Savills Research recorded about $465 million worth of retail property transactions above the $1 million mark for the Perth metropolitan area for the year, up 18 per cent from $393 million the previous year.

This is down, however, on the three-year average of $471 million.

During 2006, 62 properties were sold in the metro area, up from the three-year average of 58.

One of the biggest retail deals occurred in late December, when Westralia Property Management offloaded its City Central building and arcade at 166 Murray Street to Centro Property Group for $71.3 million.

The mixed retail and office building is anchored by Woolworths, the only major supermarket operating in central Perth.

On nearby Barrack Street, Macquarie Bank bought the 4,389 square metre Cinema City site for $16 million in August.

Previously owned by Westpoint Corporation associate Goldtag Pty Ltd, Cinema City had existing planning approval for a 27-storey residential and hotel development, however its new owners are planning a mixed-use retail and commercial development.

Prominent suburban shopping centres Maddington Village, Riverton Forum in Parkwood, Innaloo Shopping Centre, Brighton Village and Ocean Keys Shopping Centre all exchanged hands, with the Ocean Keys sold for $78 million to AMP.

In October, Busselton Home Depot sold for $24.5 million to bulky goods developer, Primewest Management.

Meanwhile, GE Real Estate flexed its buying power, securing the McNess Royal Arcade at 611-619 Hay Street Mall for $13.21 million and 255 Murray Street for $12.10 million, among other purchases.

Savills divisional director of retail services, Chris Ireland, said 2006 was also a big year for retail leasing as notable retailers such as Gucci, Borders Books, Reject Shop, Forever New and Sumo Salad opened stores in Perth.

“Most national retailers in the eastern states see Perth and Western Australia as an opportunity, and many are discussing long-term plans to enter the Perth market with two or three stores, or a flagship store, within prime retail precincts,” he said.

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