A Woolworths Metro convenience store at the foot of a modern apartment building, in St Kilda, has sold to a Sydney investor for about $8 million.
The supermarket pays annual rent of about $467,000 for the 1574 square metre space at 64 Fitzroy Street.
On that basis, the property is trading on c5.8 per cent passing yield.
The asset was offered with a lease to Woolworths expiring in 2027.
Woolworths undertook a major renovation of the area in March.
The retail space was formerly occupied by Supa IGA.
When Andrew Rettig’s R.Corporation developed the 64 Fitzroy Street apartment complex in 2002, Woolworths’ space was rented to a high-end David Jones supermarket business, which later collapsed.
The retail space uniquely fronts a tram super-stop, about six kilometres south of the city centre, near Albert Park Lake and St Kilda Beach.
JLL Victoria Retail Investments’ Stuart Taylor and Tom Noonan said more than 160 enquiries were received for the St Kilda property following the launch of their expressions of interest campaign, in April.
The brokers represented two local private investors.
“Given the low growth economic environment, investors are becoming increasingly motivated to secure defensive assets offering strong lease covenants and long-term leases,” Mr Taylor said. “The record low interest rate environment is compounding investor demand’.
“Transactions levels of supermarket and neighbourhood shopping centre assets are below the average of the last five years, which is wholly driven by a lack of supply.
“Victorian retail assets in particular are attractive to national investors, given the state’s population growth continues to lead the country.
The 64 Fitzroy Street strata space is the third Woolworths Metro to sell in Victoria, following deals for Woolworths Metro Caulfield North and Woolworths Metro Brunswick.
Mr Noonan said that “as inner suburbs continue to densify, demand for strata supermarkets has increased substantially and Woolworths’ Metro concept is well positioned with the growing trend of mixed-use developments”.
“Smaller format stores are also absorbing the changes to shopping habits where consumers are seeking greater convenience and healthy eating options.
“Given the rarity of these assets on market, when they are offered, they draw enormous investor attention.”
Last August, we reported that Woolworths leased what will be the largest supermarket in Southbank, within OSK Group’s Melbourne Square.
Seven months ago, we reported that Woolworths committed to a double-storey retail space within 3L Alliance’s Queens Place residential village, mooted for 350 Queen Street, in the Melbourne CBD.
Woolworths Metro St Kilda just the latest Melbourne supermarket investment to trade
We have reported about several supermarket investments listings and sales in Melbourne recently.
Five weeks ago, Coles listed two strata titled retail investments within the Boronia Mall, in the east.
Offered with a leaseback to Coles and Kmart, the assets are expected to sell for more than $30 million.
Also last month, two retail investments, occupied as a Coles supermarkets and Kmart store, within the Northcote Plaza shopping centre traded for a total of $60 million.
In June, the founders of dip company, Black Swan, sold a strata titled supermarket tenanted to Coles, in Lalor, for $7.4 million.
Six months ago, the Coles-anchored Coburg North Village shopping centre, traded for $47 million.
Last December, Coles sold Epping’s Aurora Plaza for $44 million.
Northcote, Lalor, Coburg North and Epping are all in Melbourne’s north.
In Geelong, in May, Woolworths sold a supermarket in Curlewis, for about $17 million, as well as a Lara store, last October. Coles sold a complex in Lara for $23.85 million earlier this year. The Bellarine Village Shopping Centre for $36.5 million last April.
Last August, in Melbourne’s east, the Nossbaum family sold a Woolworths-leased investment in Burwood East for $18.17 million, while a consortium including investment banker Michael Naphtali, and lawyers Jeffrey Pinch and Jeffrey Appel, banked $15.12 million selling a Scoresby supermarket rented to the group.
Seemingly bucking a trend – and buying to owner occupy – Coles spent an undisclosed sum on a Surrey Hills shop trading as a small format outlet (artist’s impression, above), last November.