Billions of dollars in retail development on the Gold Coast: HTW Retail

Although not abundantly obvious at first thought, there has been a massive amount of investment in retail development and refurbishment across the Gold Coast over the past few years, according to the latest report from Herron Todd White (HTW).

The financial valuation firm noted that there has been development activity across all sectors of the retail market.

Pacific Fair and Robina Town Centre are the two largest shopping centres on the Gold Coast and have collectively spent almost $800 million dollars in refurbishment works over the past five years.

The report suggested that "class leading design and unparalleled tenancy mixes will cement these centres as the Gold Coast’s premier shopping destinations for years to come, with their biggest competition or threat realistically being each other (and online shopping of course)".

In response to these redevelopments, other major centres such as The Strand and Tweed City on the southern Gold Coast and Tweed Coast, together with Oasis and Australia Fair in the central Gold Coast have undertaken major extension or renovation works in an attempt to maintain local patronage.

In order to achieve this, according to the report owners have been forced to undertake full scale renovations to totally change the face of these centres rather than just adding a lick of paint and re-tiling the common areas as was the case in the preceding fifteen year period.

The real growth however has been in the neighbourhood centre category, in particular within the growth corridor north of Helensvale and south of Beenleigh, this report suggests.

The valuers stated, "in a classic case of chicken before the egg, Coles and Woolworths have been aggressively securing sites within the region to ensure they can capture a piece of the market share over the coming decades as population growth booms in the region".

Of particular mention is made of Coles Pacific Pines which was developed as a standalone supermarket (no speciality stores) and was presented to the market for sale with a brand new 15 year triple net lease in place.

The property achieved one of the lowest initial yields seen on the Gold Coast for an asset of this size at 4.63%.

A mention must also go out to Westfield, who after decades of planning hurdles have finally commenced work on their highly anticipated Coomera Town Centre.

The $470 million centre is slated to open late 2018 with 140 new stores, including Coles, Woolworths, Kmart, Target and Event Cinemas. 

The report notes there is still a large sector of the market that will avoid major shopping centres, particularly when it comes to food and dining options and many investors who own standalone retail buildings have been capitalising on this in recent years.

"Of particular note is Palm Beach which has witnessed a massive boom in the number of restaurants, cafes and bars over the past few years - in 2018 alone, there have been 12 new town planning applications for cafes within the suburb," said the valuers.

Numerous venues in Burleigh Heads (Justin Lane), Nobby’s Beach (Hellenika), Broadbeach (The Oasis), Surfers Paradise (The Island) and Southport (Mr P.P.’s Deli) have been "re-inventing" themselves, extending floor areas and adding value to their respective properties in response to growth in the retail sector.

From a valuation perspective the biggest risk HTW can foresee moving forward is rent sustainability.

With such an influx of retail accommodation across the Gold Coast and only so many consumer dollars on offer, there will unfortunately be some retailers that will not see it through.

The HTW valuers forecast that the supply and demand metric at any given time will ultimately dictate the strength or otherwise of the retail leasing market, however their projection is that rental growth in most areas will be stagnant at best.