← All worked examplesWorked example · Retail

A 5,500 m² neighbourhood centre.

Sample assumptions, an anchor lease that underwrites the deal, and the specialty mix that has to lease up before stabilised yield is real.

Scale5
Program36 months
Yield on cost7.14%

02 / Sample assumptions

The market context behind the numbers.

Pricing benchmarks, build rates and finance terms used in this retail example. Every one is editable in Popurise.

Assumption sheet07 lines

Anchor face rent: $420 / m² net
Specialty face rent (avg): $1,150 / m² net
Anchor term: 20 years plus 4 × 5
Specialty incentive: 10% rent-free equivalent
Vacancy on specialty (stabilised): 5%
Exit cap rate: 6.25%
Senior debt: 55% LVR, 7.50% all-in

03 / Key inputs

The inputs that drive the deal.

Grouped the way Popurise groups them. Change a category, watch the retail output set respond.

0104 items

Site and GLA

Site area: 24,000 m²
Anchor GLA: 4,000 m²
Specialty GLA: 1,500 m²
Car spaces: 230 at grade

0206 items

Cost stack

Land: $11.0M
Civils and shared: $5.4M
Build and shell: $17.6M
Anchor incentive (contribution): $2.4M
Authority and contributions: $2.1M
Finance and leasing: $3.5M

0304 items

Revenue and exit

Stabilised gross rent: $3.40M pa
Outgoings (gross to net): $0.40M
Stabilised NOI: $3.00M pa
Exit value: $48.0M

04 / Base case outputs

The output set, in full.

Every number a developer wants on the screen for a retail deal, in one place.

Hero outputYield on cost

7.14%

Secondary metrics07 lines

Total development cost
$42.0M
Stabilised NOI
$3.00M pa
Exit value
$48.0M
Development margin
12.5%
Equity IRR (sell stabilised)
17.6%
Peak debt
$23.0M
Cost per m² GLA
$7,636

05 / Scenarios

Base, downside, stretch. Side by side.

Three scenarios on the same retail project. No copied files. The decision is which one to take to investment committee.

Base case

base

Anchor pre-let, specialty leased over 8 months from PC.

Yield on cost7.14%
Spread to exit cap+89 bps
Equity IRR17.6%
Development margin12.5%

Verdict

Workable. Spread is meaningful and the anchor underwrites the funding case.

Downside

downside

Specialty lease-up extends to 16 months, vacancy lifts to 10%.

Yield on cost6.41%
Spread to exit cap+16 bps
Equity IRR9.2%
Development margin2.6%

Verdict

Margin squeezed but anchor income keeps the project viable.

Stretch

stretch

Add 5 medical and food specialty tenants at +10% effective rent.

Yield on cost7.62%
Spread to exit cap+137 bps
Equity IRR22.0%
Development margin16.4%

Verdict

Strong tenant mix is the highest leverage move on a neighbourhood centre.

06 / Decision takeaway

Neighbourhood centres run on tenant mix. The anchor is the underwriting, the specialty is the upside. The spread between yield on cost and exit cap rate is where the developer is paid for taking the build risk.

Retail feasibility solution

Open

Retail feasibility model

Open

Shape retail feasibility in Popurise.

Tell us how your team models this sector today. We are building it with the developers who will use it.