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Market Insights

14.10.2019

Mentone Coles on the Market

Standalone supermarket offers $500k + rent

A prized standalone Coles supermarket, in the popular bayside suburb of Mentone, has been put on the market as investors increasingly look to commercial property for yield.

CBRE Director Mark Wizel, who is managing the sale campaign with Justin Dowers and Joseph Du Rieu, said the listing was both opportunistic for the vendor and welcome for investors.

“Over the next 12 months we are going to see a steady increase in commercial property investment as investors seek returns that are better than those on offer elsewhere.

“With global economies continuing to struggle, interest rates reaching new record lows and yields on shares, bonds and cash also at historic lows, the number of investment options offering decent returns is rapidly diminishing.

“It would then seem this listing is well-timed as it coincides with an apparent shift in investor sentiment and a lack of attractive investment alternatives,’’ Mr Wizel said.

Located at 81 Mentone Parade, the property comprises a freestanding, internally refurbished, 2854 square metre (GLA) supermarket with access to more than 150 at-grade council car parks.

The property will be sold with the benefit of a 10 year lease from January 2017, with a further 10 year option, to Coles at a current rental of $519,785 per annum net.

Mr Dowers said demand for the asset would also be bolstered by the property’s long term value-add and development prospects.

“The property obviously has a number of investment attributes, not the least being its 100 per cent non-discretionary, blue chip, tenancy profile. But there is a further aspect that will drive buyer interest and that is around the site’s central location, its flexible zoning and its suitability for, perhaps, a mixed-use redevelopment down the track.

“More and more we are taking enquiries from prospective buyers with questions on zoning, site access and population growth forecasts. The recognition of long-term, value-adding with metropolitan retail opportunities is the new black with what had been a relatively passive retail investor cohort, and it has swelled their ranks,’’ Mr Dowers said.  

Zoned Activity Centre Zone (ACZ2), the high profile, 2600 square metre site sits on the corner of Brindisi Street, opposite Mentone Reserve and sporting fields and within a short walk of the new Mentone railway station, and offers a combined 106 metres of street frontage.

Activity Centre zoning allows for a mixture of land use activities (as of right) with an overarching purpose of promoting mixed use commercial centres featuring retail, office, business, entertainment and high density residential uses.

The local population grew 10.9 per cent over the five years between 2011 and 2016, and over the same period there was a 12 per cent increase in dwellings*.

Mr Wizel said the sale would be a test of the strength of Victoria’s retail investment market.

“We are not expecting a record yield, indeed yields have been easing over the last 18 months, but it would not surprise to see very robust competition between interested parties at what should be a very well-attended Spring auction”, he said. 

Coles Clayton, which sold last year for $17.115 million, holds the Victorian record yield for standalone supermarkets at 2.57 per cent, with the previous record held by Woolworths Middle Brighton which sold for $32 million on a 3.8 per cent yield in 2016. Both assets were sold by CBRE.

Victorian standalone supermarket sales 2018/2019

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The property will be auctioned on Thursday, November 21, at 12:30pm.

*https://home.id.com.au/

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