|3.4% growth in comparable FFO across our Commercial Property portfolio|
|75% Retail tenant satisfaction TenSAT score produced by Monash University|
|89% Logistics and Business Parks tenant satisfaction|
|99.5% occupancy (stable assets) across Retail portfolio|
|99% occupancy (stable assets) across Logistics and Business Parks portfolio|
|Funds from operations|
|($M unless otherwise stated)||FY17||FY16||Change||Comparable
||419||402||4.1% ↑||3.5% ↑|
||143||132||8.3% ↑||3.6% ↓|
||59||68||13.2% ↓||2.3% ↑|
|Total Commercial Property||608||584||4.2% ↑||3.4% ↑|
|Return on assets (ROA)||8.1%||8.3%|
In a challenging environment, we have delivered positive FFO growth of 4.1%, maintained high occupancy, and we continued to focus on remixing our portfolio in line with our customer needs and trade area dynamics.
Nationally, retail sales have been impacted by low wages growth, some retailer closures in the past year, and mixed results from major tenants. While trading at some of our centres has been variable, we have seen an improvement in sales growth in the second half and particularly in the final quarter. Specialty store sales productivity grew 1.9% to $9,072 per square metre, which exceeds the Urbis sub-regional average of $8,273 per square metre by 8.3%.
We continue to see growth in lifestyle and entertainment tenancies, particularly larger format operators such as JB Hi-Fi, Hoyts and Harris Scarfe, and we've recently confirmed that H&M will open news stores at our Townsville and Rockhampton centres. Growth in specialty retail sales of 9.7% in retail services and 5.3% in casual dining and food catering over FY17, reflects the success of our remixing strategy. We also continue to look at ways to introduce technology to enhance our customers' experience across our centres.
Momentum continued in the delivery of the retail development pipeline, with the $412 million transformation of Stockland Green Hills at East Maitland progressing on scheduled, and a $37 million redevelopment underway at Stockland Wendouree in Ballarat.
The Retail business maintains its focus on creating market leading town centres, redeveloping its most productive assets to create community and entertainment hubs and maximise trade area market share. We have $449 million, at cost, of retail development under construction and a future pipeline of $1 billion, targeting incremental IRRs of 9%+ and stabilised FFO yields of 7%+ from this activity.
Our retail mix continues to evolve, underpinned by supermarkets, mini majors, food catering, fast casual dining, specialty food, theatre, targeted apparel, health and retail services.
We will continue to focus on tailoring our offering to each specific trade area, cultivating retailer relationships and long-term sustainable rent, and invest in industry research and technology to adapt to an evolving retail landscape.
Our Logistics and Business Parks business had an outstanding year. Occupancy increased to 99%, following a period of active leasing and renewals, and the portfolio now represents 15% of our total assets.
We achieved strong comparable FFO growth of 3.6% with positive leasing results, particularly in the Sydney market.
Our development pipeline is also progressing well, with recent redevelopments at Ingleburn (Sydney), Erskine Park (Sydney) and Oakleigh (Melbourne) all completed on budget and fully leased. A $77 million development project is underway at Wawrick Farm (Sydney), which is majority pre-leased to Daikin, for a 10 year term. The future pipeline also looks very positive.
Our focus is on growing a market leading portfolio of logistics centres and business parks. We will leverage our existing assets and land, strong tenant relationships and asset management skills to become a scale player in this market.
Our Sydney Office portfolio performed well this year, which represents the majority of our assets. Total FFO growth was lower due to the sale of Waterfront Place and Eagle Street Pier, Brisbane in FY15. The Perth and Canberra market remains challenging, but we are seeing positive leasing momentum at our assets. Several of our Sydney properties also have development opportunities.
In Office we continue to focus on optimising returns. We intend to retain the majority of our residual Office portfolio (strongly weighted to Sydney whilst we maximise returns and assess development opportunities over time. Joint ventures (or part sales) will also be considered as appropriate.