Woolworths Torquay Central to fill major investment demand / supply imbalance

Stonebridge Property Group’s listing of the standalone Woolworths Torquay Central supermarket will test the market for a product that has long been an investor favourite, based on recession-proof non-discretionary-spend tenancy profiles and long leases to blue chip tenants.

Located on the corner of Bristol Road and Walker Street, right at the heart of Torquay town centre, the Commercial 1 zoned 7331 square metre site with four street frontages, will also attract the interest of investors with an eye to potential future redevelopment options at the gateway to the Great Ocean Road.

The freestanding, 2980 square metre (GLA) building includes a BWS store and is let on a 20 year term, expiring late in 2024 plus further options, with a passing net income of $916,029. There are 127 car spaces on title and the benefit of additional car spaces on an adjacent council lot.

According to Stonebridge partner, Justin Dowers, who is marketing the property with Kevin Tong and Phil Gartland, Woolworths recently undertook a $5 million capital works program highlighting the retailer’s confidence and commitment to the location.

“Standalone supermarkets are rare and highly sought after by investors and have been over a long period of time and in many instances have produced very strong results. That has been due to some of the best investment credentials you will find in any commercial property asset including long leases, blue-chip tenants and high underlying land value.

“Daily needs tenants, like Woolworths, with an exceptional track record of performance, add another level of tenancy and rental income security which is particularly attractive in uncertain times,’’ Mr Dowers said. He said the property would be sold with a rare NET lease structure to Woolworths/ BWS, at a low occupancy cost ratio of under 3%, and with a growing supermarket turnover.

Recent sales of freestanding supermarkets show very strong demand reflected in many instances in sub 5% yields

Freestanding Woolworths Supermarkets sold in the last three years include:

Property Price Yield Sale
Supermarket Transactions with Development Upside
Coles Mentone $15.3 mil 3.39% 2019
Coles Northcote $25 mil 4.35% 2019
Coles Clayton $17.2 mil 2.57% 2018
Supermarket Transactions – Investment
Dan Murphy Wangaratta $8.1 mil 3.68% 2020
Dan Murphy Chirnside Park $12.4 mil 3.98% 2020
Woolworths Lara $21.1 mil Circa 5% 2019
Woolworths Leongatha $14.3 mil 5.3% 2019
Woolworths Burwood East $18.17 mil 4.60% 2018
Woolworths Scoresby $15.12 mil 4.54% 2018
Woolworths Hadfield $11.75 mil 3.50% 2018
Woolworths  Brunswick $13.5 mil 4.8% 2017
Woolworths Highton $12.43 mil 4.6% 2017
Woolworths Brighton $32 mil 3.8% 2016

Source: Stonebridge Property Group

Strategic Commercial Landholding

Mr Tong said the property represented the most substantial and strategic commercial landholding in Torquay providing significant scope for future mixed-use redevelopment given the central location opposite Taylor Park and only 300 metres from Torquay Beach.

“We are not simply talking about a recession-proof income stream from a blue chip tenant, but a property which also offers exceptional development prospects down the track at the gateway to the Great Ocean Road – one of Australia’s foremost tourist destinations,’’ Mr Tong said.

He said the increasingly affluent locality was experiencing high levels of tourism and population growth, being an ideal location for sea-changers with the potential for significant acceleration as the working from home trend increased.

According to .idcommunity the estimated residential population of Torquay-Jan Juc in June 2019 was just over 20,000*, a rise of 5.5% on the previous year, in comparison to population growth in regional Victoria as a whole of 1.37%.

Mr Tong said Torquay was unlike any other regional area, given the affluence of the locale, in addition to strong tourism activity.

“Torquay is displaying demographic fundamentals in line with some of the top suburbs in metropolitan Melbourne with alignment on median house prices, household income, home ownership and a low unemployment rate,’’ Mr Tong said.

20% Stamp Duty Concession

Mr Tong said prospective purchasers would benefit from a significant 20% reduction in stamp duty for commercial properties purchased across regional Victoria. The State Government concession includes transactions entered into on or after July 1, 2020 and before 1 July 2021.

“The long and short of it is, if you buy a commercial property in regional Victoria you get 20% off your stamp duty and that is going to be worth quite a significant amount of money.’’

For further information please contact:

Justin Dowers | Partner | +61 438 098 805 | jdowers@stonebridge.com.au

Kevin Tong | Director | +61 422 848 818 | ktong@stonebridge.com.au

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