First Major Test of Australia’s Retail Market In “COVID-Normal” Environment

Posted on 21st February 2022

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 23 Arthur Street, in conjunction with Stonebridge Property Group, via an 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 4,249sqm modern, full-line supermarket returns $1,166,000 per annum with full recoveries of outgoings including state land tax.

Built 20 years ago, it has a large 282 car parks over 2 levels 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 in a low interest rate environment, with a COVID-proof income stream, and a prime location within an established and growing catchment.”

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 interest is expected from local, national and international buyers.

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.

Woolworths Eltham benefits from a strong established trade area of over 56,000 people, with excellent growth projections over the next decade.