The recent sale of a shopping centre in Melbourne highlights the strengthening of the Victorian retail investment market, CB Richard Ellis said.

The Bundoora Square shopping centre in Melbourne was sold for $20.9 million and is the first shopping centre transaction in Victoria for the year.

Mark Wizel and Justin Dowers of CB Richard Ellis’s Victorian retail investments team negotiated the off-market sale on behalf of Lascorp Development Group.

Wizel said the deal reflects a tight yield of 7.4 per cent and provides the latest evidence of a strengthening in the retail investment market.

“Given the lack of retail investment opportunities coming to the market, investors are willing to accept a tighter yield with the anticipation of short to medium term growth in retail spending and ultimately retail rents,” he said.

“No doubt many buyers were hopeful that more neighbourhood centres would be offered to the market for their consideration but in real terms this simply has not happened and if anything it has been larger centres that have been available but have often failed to transact due to vendor expectations and or difficulty in funding larger acquisitions.”

Developed by Lascorp in 2002, the local shopping centre has Coles as the anchor tenant on a 15 year lease, with two 10-year options. There is also a mix of 14 specialty tenants including Commonwealth Bank, Flight Centre, Nando’s, Wishbone and Brumby’s Bakery.

Dowers said many buyers were seeing this as their opportunity to act and secure quality investments for the medium to long term.

“There appears to be a lot more confidence in the Victorian retail market compared to the other states primarily due to economic influences such as the city’s continued population and job growth,” he said.