Increase in forced sales of retail strips and warehouses expected in second half of 2012: Colliers International

There is expected to be a rise in the number of forced sales of retail strip properties and warehouses in the second half of the year, according to Colliers International’s Matthew Meynell.

Meynell, team manager of Colliers Insolvency Property Services division in NSW, expects a rise in distressed retail strips listed for sale due to the impact of the high Australian dollar on importing costs as well as retail strip landlords struggling to compete with the “super regional centres” on rental rates per square metre.

A distressed asset is one that is put up for sale, usually at a cheaper price, because the owner is forced to sell due to bankruptcy or excessive debt.

According to calculations by SmartCompany last month, more than 650 retail store closures have been announced since the beginning of the year, and more than 1,600 workers left without jobs. Retail businesses including Fletcher Jones, GAME, WOW Sight and Sound, Dick Smith, Speciality Fashion Group have all announced plans to scale back their retail footprints dramatically.

Last year warehouses were the most prominent distressed asset class among forced sales due to the struggling manufacturing sector, and Meynell expects industrial assets to remain prominent among distressed listings.

Colliers International figures for the first half of the year show a drop in the number of distressed commercial assets listed for sale from 378 to 329 following a drop in companies entering into external administration from a peak in September 2011.

Queensland had the highest number of distressed assets for sale in the first six months of the year at 143, but this was well down from the 181 listed for sale for the first six months of 2011.

There was also a smaller drop in distressed assets listed for sale in NSW and WA.

Meynell says in both states there has been a lot more of “micro-managing of distressed assets” which has cleaned out a lot of the distressed assets listed for sale after the GFC.

Current listings of distressed commercial properties include the 10,000-square-metre Casula Central bulky goods centre in Sydney being sold by Brett Burridge from Knight Frank and the 6,500-square-metre Home Central Retail Centre in Coffs Harbour listed for sale by Troy Mitchell of LJ Hooker Commercial and Jon Tyson of Savills Brisbane.

High-profile distressed asset listings include the Crowne Plaza Hunter Valley, which hotelier Jerry Schwartz is finalising plans to buy for $45 million. The property was listed for sale by Meynell alongside Colliers International colleague Steam Leung on behalf of receivers Ferrier Hodgson.