August 8, 2012
Affected by the high Australian dollar and competition from "super regional centres", more retail strip properties and warehouses will be put on forced sales in the second half of the year, said Colliers International.
The second half of the year will see more distressed properties being put on the market. Forced sales of strip retail malls and warehouses are expected to rise, said Colliers International, due to the impact of the high Australian dollar on importing costs as well as retail strip landlords struggling to compete with "super regional centres" on rental rates.
Distressed assets are ones that are put on the market by owners forced to sell due to bankruptcy or overwhelming debt. These properties are usually offered at a cheaper price.
Since the start of the year, more than 650 retail store closures have been announced, according to data compiled by SmartCompany in July. The closures have caused more than 1,600 people to lose their jobs, it added.
Major retail businesses - among them Fletcher Jones, GAME, WOW Sight and Sound, Dick Smith and Speciality Fashion Group - have also announced dramatic cuts to their retail footprints in the country.
Besides retail strip units, warehouses are also expected to feature prominently in forced sales this year, following on from their status as the most-listed distressed properties last year, noted Colliers.
The property consultancy said that for H1 2012, there was a drop in the number of distressed commercial assets listed for sale from 378 to 329. This was representative of a reduction in the number of companies entering into external administration from a peak in September 2011.
Although 143 distressed assets were put up for sale in H1 2012, this was nevertheless lesser than the 181 listings recorded in H1 2011.
In NSW and WA, there was a smaller drop in such listings. Colliers said that a high level of micro-managing of distressed assets in both states had reduced the number of such properties listed for sale after the global financial crisis.
Distressed commercial assets currently listed for sale include10,000-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.
Also listed is the Crowne Plaza Hunter Valley, which is being considered by hotelier Jerry Schwartz for AUD 45 million.
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