The privately owned Surry Hills Shopping Village has been put up for sale with the potential to be converted into mixed use residential.
It was bought by the owner, a private high net-worth investor, 30 years ago for $6.3 million, and while no price has been disclosed, similar sites in the inner city have sold for more than $95 million in the past year.
Scott Timbrell and Jeff Moxham of Ray White Commercial NSW, are advising on the sale, and said the redevelopment potential of the village will see it transformed from an older suburban shopping centre to a significant mixed use development site in the inner city, Surry Hills area.
The mall is at 240 Baptist Street and 397-399 Cleveland Street, Redfern, which is fast expanding as part of the area's rejuvenation.
"The sale of such a large high-profile city fringe site is an extremely rare offering," Mr Timbrell said.
"The site is underpinned by a significantly underdeveloped parcel of land of about 12,322 square metres."
According to Mr Moxham, these parcels of land provide development opportunity in a high growth location.
"It is currently a multi-tenanted commercial shopping centre," Mr Moxham said.
Brisbane-based Sentinel Group has also identified neighbourhood-style malls as investment potential as part of its expansion plans into city and country NSW.
It is understood the group has a number of new centres under due diligence in NSW and further on its radar for future acquisition. It is also opening corporate offices in NSW to manage its ever-growing portfolio, which currently comprises eight retail centres, and the group also has a growing NSW investor base.
Warren Ebert, Sentinel's managing director, said the group's new open-ended pooled Sentinel Countrywide Retail Trust has a specialist focus on regional neighbourhood-style shopping centres, and currently hasa number of new assets under due diligence in NSW and is constantly seeking out new buying opportunities.
"We have a lot of confidence in the NSW retail market, in particular centres anchored by major supermarkets in strategic regional and rural hubs with diversified economies and strong transport links," Mr Ebert said.
Sentinel's NSW retail portfolio comprises the Menai Central centre south of Sydney; the Riverside shopping centre in Dubbo; the Orange Homemaker Centre; the Hunter Supa Centre in Rutherford; Coles-anchored shopping centres in Rutherford, Tanilba Bay and Gunnedah; and the Homeworld centre in Tuggeranong in ACT.
According to Vanessa Rader, head of research for Ray White, said demand has not been this high for quality assets since pre GFC where the weight of money saw significant cap rate compression nationally.
"Competition both domestically and off-shore for well-located property across all asset classes looks set to continue to increase into 2015 particularly as record low interest rates are set to be a permanent fixture." Ms Rader said.
"Residential development sites continue to be in strong demand particularly within fringe and inner-city markets with more and more foreign developers looking to make their mark in the Sydney market."
Population increases within the City of Sydney due to the influx of residential development is already taking its toll on local infrastructure including retail, the limited supply of shopping facilities will ensure that those existing local centres benefit from increased trade particularly given the strong student and tourist population within the fringe locations.
"Over the past three years we have continued to see the rezoning of industrial land uses to allow for residential development, further enhanced by Urban Growth identifying lands requiring increased densities across Sydney," Ms Rader said.
