Woolworths has sold major sub-regional centre development, Brickworks Marketplace, in South Australia to Charter Hall for an estimated $75 million.

Acting on behalf of Woolworths, Simon Rooney of JLL negotiated the pre-sale of Brickworks Marketplace in Torrensville, Adelaide to Charter Hall.

Brickworks Marketplace sub-regional shopping centre will be constructed by Woolworths with expected completion around mid-2015.

The Brickworks Marketplace site is located about four kilometres from the Adelaide CBD.

The new sub-regional shopping centre will be 17,300sqm and feature a BIG W, Woolworths, Dan Murphy’s, and around 5200sqm of supporting retail specialty space.

Simon Rooney, JLL’s head of retail investments for Australia, said the Adelaide market has been very active lately.

“The successful sale of Brickworks Marketplace in Adelaide follows the sale of Golden Grove ($129.1 million) in July to Challenger Life, and Arndale Central ($152 million) in September to Armada Funds Management.”

The acquisition of Brickworks Marketplace in Adelaide follows Charter Hall’s recent joint purchase (with HostPlus) of a $603 million portfolio of properties from the Woolworths subsidiary, ALH.

“The volume of sub-regional transactions for 2014 year to date has reached $2.3 billion being a record for Australian market, and is significantly higher than the 10 year annual average of $780 million. It also follows an exceptionally active year in 2013 when over $1.8 billion transacted.

“There is strong investor demand for sub-regional shopping centres at present. The recent successful fund recapitalisation of Lend Lease REP3, negotiated by JLL, which comprised five sub-regional centres for in excess of $600 million, demonstrated the significant strength in investor demand for assets in this retail category.

“We are looking to shortly finalise a further $500 million of sub-regional transactions in the near term.

“Growing competition among motivated investors is driving yield compression in the sub-regional sector” said Rooney.

Sub-regional yields (nationally) tightened by 23 basis points in the September quarter to 7.35 per cent on average according to JLL research, and currently range is between six per cent and nine per cent.

According to Rooney, Woolworths and Wesfarmers have been a major source of retail investment product since the GFC through the sale of their property developments and portfolios. Combined, the two groups have disposed of in excess of $2.3 billion of retail property in the direct market since 2008 (excluding the float of SCA Property Group in 2012).