Investors are continuing to seek out defensive bricks-and-mortar assets, with Coles-anchored neighbourhood shopping centre Torquay Village selling for an undisclosed price, as the Surf Coast again proves its investment credentials amid an ongoing surge in growth and popularity.
Fitzroys Director Paul Burns negotiated the off-market sale of Torquay Village, at the corner of Bristol Road and Payne Street, on behalf of IP Generation. The purchaser is a private Malaysian investor who has various property holdings in Australia.
Fully-leased, Torquay Village comprises a 4,056sqm full-line Coles supermarket - the largest in the main trade area - as well as 14 specialty tenants and one ATM for a total lettable area of 6,779sqm. The centre is on a significant 14,030sqm site with 260 car parks and 260 metres of street frontage, centrally located in the Torquay retail precinct.
It has a long weighted average lease expiry (WALE) of 7.6 years by income and 8.19 years by area.
“Amid the broader market slowdown and a highly publicised gap between expectations of sellers and vendors, neighbourhood shopping centres have continued to trade strongly and on healthy yields on the rare occasion that they’ve come up for sale. Investors are seeking surety and so turning to defensive bricks-and-mortar assets with essential services tenants that have proven their resilience through the turbulence of the past few years,” Burns said.
“The current higher interest rates clearly haven’t deterred investors from pursuing high-quality opportunities.”
Most of the specialty tenants at Torquay Village are non-discretionary retailers, he said.
“Some specialty tenants are currently paying turnover rent, and Coles are close to their turnover threshold so rental growth is imminent. This was an attraction to the purchaser.
“Good centre management has resulted in Torquay Village trading very well, and despite the challenging economic conditions, there are no vacancies and there’s been strong demand from businesses looking to move into any available specialty shops.
“Torquay Village has excellent trade prospects given its central location on the Surf Coast, which continues to benefit from sea changers and significant new residential developments in nearby locations such as Armstrong Creek.”
“IP Generation have added significant value to Torquay Village during their ownership, delivering a high-quality tenancy mix to complement a strongly performing Coles. It is an outstanding long-term passive investment,” Burns said.
The Surf Coast is the seventh-fastest growing LGA in Australia, according to the 2021 Census. The recently adopted Torquay-Jan Juc Retail and Employment Land Strategy forecasts the current circa 22,000 population of the Torquay-Jan Juc area to surge by a further 12,000-plus residents by 2036.
The deal marks the second time in a year that IP Generation has ridden the wave of growth on the Surf Coast and sold a Torquay investment. Last year, also through Paul Burns in an off-market deal, IP Generation sold a mixed-use, multi-tenanted building in Baines Crescent for $40 million.
“This transformative period for the Surf Coast is continuing to have a profound effect on its commercial property market,” Burns said.
He said the 50% stamp duty discount that applies to regional Victorian commercial property purchases was an additional attraction to the purchaser of Torquay Village and Baines Cres. Lower site values, thus land tax is also an attraction of regional property.