Retail yields converge

With Andrew Quillfeldt and Peri Macdonald

Yields of neighbourhood and sub-regional centres have crossed over for the first time, reflecting an increased investment appetite for neighbourhood assets and putting the emphasis on the real key drivers of value.

  • 01

    Investors are very discriminating in pricing shopping centres.

  • 02

    Demographics, location and tenant mix among the key value drivers.

  • 03

    Investor interest in super-neighbourhoods expected to intensify.

Neighbourhood shopping centres have emerged in recent times not only as preferred shopping destinations for time-poor consumers, but as an attractive destination for investors in retail assets. 

According to new research from JLL, the re-rating of neighbourhood shopping centres is reflected in the convergence of yields of neighbourhood and sub-regional centres. 

This is the first yield cross-over on record and while it is too early to know whether this is a permanent shift, it is evidence that investors are re-assessing neighbourhood centres that have historically traded at a discount to other retail formats – sub-regional and regional centres as well as CBD retail assets.

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