Convenience, neighbourhood, large format retail outlets lead Brisbane activity

The convenience, neighbourhood and large format retail outlets lead the activity in the Brisbane retail market, according to Herron Todd White.

Herron Todd White's September Month in Review noted an insatiable demand from investors for centres in the sub $10 million category and demand for Coles or Woolworths in neighbourhood shopping centres in the $10 million to $30 million range.

"Demand is being driven by a search for yield at a time when share markets are volatile and interest rates are at a record low and as a consequence, yields of 6% to 7% which were previously the domain of premium quality assets, are now becoming commonplace for even some second tier assets," it said.

"There is, however, a significant risk that the market may be overshooting for such second tier centres.

"At the neighbourhood end of the spectrum, recent sales of two new Woolworths anchored centres at Logan Village and Ormeau showed yields of 6.7% and 6.5% respectively, showing that there is very strong demand and tight yields for such centres with secure long term anchors. An interesting feature of such sales is that some percentage rent thresholds are set at levels which are very unlikely to be achieved for many years."