Coles Group Property Developments is moving to sell a major mixed-use apartment and retail site in Sydney’s south amid strong ongoing investor interest in non-discretionary and supermarket-anchored retail assets.
CBRE’s James Douglas and Ben Wicks have been exclusively appointed to market the high-profile Coles Caringbah site, which has development approval and an Agreement for Lease in place for a full-line 4,073m2 Coles supermarket and Liquorland, with the proposed development also including six speciality shops, as well as 120 apartments.
The 6,453m2 Coles site benefits from a high-profile location in the tightly held and affluent suburb of Caringbah and is located only 300 metres west of the Caringbah train station. Douglas said significant interest was anticipated from both traditional retail and mixed-use development investors, with a wave of capital targeting non-discretionary and supermarket anchored retail assets.
“Rarely are full line supermarket development opportunities, with a complementary residential component, offered to the market in metropolitan Sydney, with this particular site also benefitting from a planning approved development scheme and a lease commitment from leading ASX listed supermarket operator Coles Group Ltd,” Douglas said.
Ben Wicks from CBRE’s Residential Developments team added, “The residential market in the Sutherland Shire has experience significant growth in value over the past six to 12 months, primarily driven by increased demand, reduced supply, historically low interest rates and the availability of finance.”
Meanwhile, Oatley Village Square has transacted following a hotly contested sale campaign, highlighting strong investor demand for convenience-based retail assets. The centre was acquired by a private investor with the sale price reflecting a tight initial yield of 4.81% and a price of approx. $22 million. CBRE’s James Douglas, Joe Tynan and Michael Hedger negotiated the sale on behalf of Bayley Property Group.
Oatley Village Square sold at a tight initial yield of 4.81%
Situated 23km south of the Sydney CBD, the centre is anchored by a strong-performing Coles supermarket and Liquorland. It has a gross lettable area of 3,523m2 and features a 120-space car park.
“Investors continue to actively pursue quality retail opportunities with a clear focus on defensive, non-discretionary retail assets given the highly resilient nature of these investments,” Douglas said.
“The incoming purchaser was attracted to Oatley Village Square’s metropolitan location and strong underlying investment fundamentals, with the asset being the dominant centre and the only supermarket offering in the well-established and densely populated primary trade area.” he said.
Tynan noted that the Coles lease at the centre extended until 2027, with two further 10-year options – with Coles / Liquorland representing 86% of the gross tenant income and 81% of the gross lettable area.
“Coles’ performance provides the opportunity for future growth, as do the specialty tenancies, which have strong in-built annual rental reviews,” Tynan said.
Alongside Coles and Liquorland, Oatley Village Square features a strong line up of non-retail uses and services including Murraya Wellness Spa and Spa and Finpos Accountants.
The sale follows that of another Coles anchored Sydney neighbourhood centre, Entrada Shopping Centre, which transacted earlier in the year for $41.435 million.
Entrada Shopping Centre
While lockdowns across the nation are expected to pose potential retail trading headwinds, opportunistic investors are taking a longer-term view and have added retail assets to their shopping lists.
CBRE’s MarketView shows that total value of Australian retail transactions jumped 82% to $2 billion between Q1 and Q2, 2021, with the increase even more pronounced at 187% on a y-oy basis, given that Q2 2020 was heavily impacted by COVID restrictions.
CBRE’s Head of Retail Research Kate Bailey said the strongest yield compression came from neighbourhood centres (-18bp q-o-q) and subregional centres (- 15bp q-o-q), with both sectors benefiting from strong supermarket sales.
