Australia’s retail property market is set for its first test in the “COVID normal” environment of 2022, with the high-performing freestanding Woolworths Eltham up for sale.
Fitzroys’ David Bourke, Chris James and Shawn Luo have been appointed to market the modern supermarket asset at 7 Arthur Street, in conjunction with Stonebridge Property Group's Justin Dowers and Kevin Tong, via an international Expressions of Interest campaign closing 24 March.
Expectations are of circa $30 million as a fast-growing pool of investors looks for defensive, income-producing investments that have proven to be pandemic-proof.
Leased to blue-chip tenant Woolworths on a brand-new five-year lease plus options through to 2050, the 3,800sqm modern, full-line supermarket returns $1,073,166 per annum with full recoveries of outgoings including state land tax, and annual rent increases.
Built 20 years ago, it has a large car parking allocation and is on a substantial Commercial 1-zoned site of 9,044sqm in a high-profile location between Coles, Aldi and Dan Murphy’s in the centre of the Melbourne suburb of Eltham and its major commercial precinct, and located just moments from Eltham train station and multiple bus routes.
“This promises to be the first test for Australia’s retail property market in the ‘COVID normal’ environment,” Bourke said.
“The asset has been offered at an ideal time, with defensive and daily needs-oriented retail assets at the top of investors’ shopping lists, and a huge amount of pent-up capital waiting to be deployed after low levels of quality stock came to the market over the past two years,” he said.
“Freestanding supermarkets in established metropolitan locations are an ultra-rare proposition that offer some of the most prized fundamentals of any commercial property investment in the current climate.
“Woolworths Eltham offers a blue-chip tenancy covenant and COVID-proof income stream, with supermarkets having remained open and trading over the past two years, and a prime location within an established and growing catchment.”
James said investors consider freestanding supermarkets among the most prized assets in the market, evidenced by the sharp yields seen in recent months for assets in Melbourne’s established suburbs of Balwyn, Hawthorn, Malvern and Blackburn South.
“Australia has retained its safe-haven investment status throughout COVID and we expect interest from local, national and international buyers,” he said.
“We further anticipate strong interest now that state and international borders have opened up.”
Luo said, “Interest rates are expected to remain low for some time and a freestanding major supermarket offers among the safest and best income-producing investment opportunities in the current environment”.
Dowers noted there are high barriers of entry for supermarkets in the area, with any supermarket finding it difficult to secure a suitable site to relocate.
“Woolworths Eltham benefits from a strong established trade area of over 56,000 people1, with excellent growth projections over the next decade,” he said.
Tong said the substantial 9,044sqm site also offers excellent land banking credentials and huge underlying land value.
“Investors can look forward to a sizeable passive income stream from a blue-chip tenant, while the site’s favourable Commercial 1 zoning and location in the major commercial precinct of Eltham present huge longer-term potential.”
He said the site is in an easily accessible location with high levels of car parking and close to public transport, and which receives a constant stream of shoppers every day.
