Burwood One shopping centre for sale in potentially the biggest retail deal of 2018

If the owners, the Hansky family from Melbourne, find a buyer for the centre in Burwood East, the total value of retail sales in Victoria this year could easily tick above $500 million.

About $270 million in sales have been closed by CBRE’s Retail Investments team since March, including the sale of Mornington Village Shopping Centre, which sold for $39.38 million in May; The Village Bacchus Marsh Shopping Centre netting $61.65 million in April and Highlands Shopping Centre, which was snapped up for $43 million the same month.

Other sales include the $117 million purchase of the Gateway Plaza in Leopold, in Victoria’s Geelong, to Charter Hall in June.

CBRE’s national director of investments Mark Wizel, who is selling Burwood One with Justin Dowers and Lewis Tong, said he foresees buyers from Australia and overseas being attracted to the centre’s large scale and its potential as a development site.

“Given its size, location, tenancy profile and growth potential – both in terms of its current guise and future site development potential – this is the sort of asset which will attract a very strong field of buyers and that competition could drive a yield not seen before for an asset of its kind,” he said.

The two-storey centre at 172-210 Burwood Highway has nearly 27,000 square metres in gross leasing area and nearly 1000 car spaces.

Generating a net income of more than $9.5 million a year, Burwood One is anchored by Coles, Kmart and Aldi. Other tenants include six mini-major retailers, 51 specialty shops and two automated teller machines (ATMs). The vacancy rate is zero.

Apart from the size, the property’s location is another factor expected to draw interest, Mr Wizel said.

“Location is of course critical to shopping centres and there is no doubt that the success and growth of Burwood One is largely attributable to its relatively close proximity to what has been for decades Melbourne’s demographic centre: Glen Iris,” he said.

He added that that retail catchment had been the catalyst of “numerous high-density residential developments” nearby.

The underlying land value of these major retail assets are becoming a growing priority for investors, especially those with long-term focuses, Mr Dowers said.

“Well-placed assets like Burwood One, in an enviable demographic heartland position, can offer an owner significant future development potential in terms of maximising a site’s utility,” he said.

“Where a site is within the centre of town, this has the potential for a substantial mixed-use development down the track. In the meantime the owner has an asset which provides a not insignificant income stream.”