Coles Mentone sells for $15.3m

The L-shaped site includes a recently renovated supermarket.

One of two Chinese investors who flew in for the auction of a Coles supermarket in bayside Mentone last week walked away with the title.

The centre, 81 Mentone Parade, exchanged for $15.3m reflecting a 3.4 per cent passing yield.

Marketing agency CBRE said this is the tightest return for an investment of this type since a Coles-anchored Clayton complex traded last year (at 2.57pc).

Three offshore investors – which the agency said were sourced through its Asian Services desk – drove Mentone bidding over $12m.

The asset includes a 2854 square metre recently refurbished freestanding supermarket returning annual rent of $519,785.

Coles signed a 10-year lease in 2017.

It can renew until 2037.

Coles Mentone

The 2600 sqm Coles Mentone holding is appropriate for high-density development, opposite Mentone Reserve, at the southern edge of a retail village near the suburb’s train station.

Justin Dowers said the long-term prospects for the block bolstered demand.

“More and more we are taking enquiries from prospective buyers with questions on zoning, site access and population growth forecasts,” the executive added.

“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” (story continues below).

The agent marketed Coles Mentone with Kevin Tong, who heads CBRE’s Asian Service Desk.

Mark Wizel said in 2019 there was a trend toward “defensive property investments” with neighbourhood centres and standalone supermarkets doing particularly well despite the negative factors affecting the retail sector.

“As the year progressed we have taken an increasing number of enquiries from both traditional retail investors and a group of investors newly attracted to this type of asset,” according to the agent.

“That includes regular equity market investors chasing yield and security, and those who are also attracted to the potential development upside,” he said.


“While yields for standalone supermarkets softened over 2019, they had come off a very strong retail market highlighted by the sale of Coles Clayton in early 2018 on a record 2.57 per cent yield,” according to Mr Wizel.

Two investors flew in from China to attend the auction last week. One walked away with the title.

“This year we have seen yields hover around 5.5pc following an average closer to 4.5pc over 2018 but this result unambiguously indicates demand for this product remains very strong,’’ he added.

Coles Clayton, which sold for $17.115m, traded on a 2.57 pc yield.

Woolworths Middle Brighton sold in 2016 for $32m, a 3.8 pc return.

Last May, another supermarket leased to that group, in Glenroy, traded for $11.75m, a 3.57 pc yield.

Other standalone, investment-grade, supermarket deals struck since 2018 are detailed in this CBRE table:

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of