Bag a Coles and Aldi in one big buy
Properties with leases to major supermarket chains are about as prime as it gets in the commercial property market.
So a rare chance to snare a neighbourhood shopping centre with both a Coles and an Aldi inside presents as a hot opportunity for investors.
The Aurora Village centre at Epping in Melbourne’s northern suburbs is on the market, with a new owner to be found after an expressions of interest campaign closes on November 22.
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The centre currently includes leases to Coles for 15 years, with four 10-year options, as well as Aldi for 10 years with an additional two 10-year options.
Coles and Aldi make up 73% of Aurora Village’s lettable space, while the rest comprises 16 specialty stores and a Coles Express service station.
The shopping centre takes up 21,880sqm of the 23,265sqm site and attracts annual rents totalling more than $2.5 million.
CBRE’s Justin Dowers, Mark Wizel and Kevin Tong have been tapped to market the property.
An Aldi store forms a part of the Aurora Village shopping centre.
“Coles Aurora Village has a number of elements that will promote income growth,” Dowers says.
“The net lease structure to Coles and attainable percentage rent threshold will promote rental growth in the near future, while the ALDI lease provides annual rent increases and the conservative specialty tenant rental levels will maintain healthy growth rates as the centre continues to attract a disproportionate share of customers within the rapidly growing catchment area,” he says.
“The best is yet to come for this centre. There are a number of infrastructure projects occurring in addition to continued housing development in the dedicated catchment area that will only make it more convenient for more customers to shop.”
The listing comes amid a simmering shopping centre market, with $6.817 billion worth of centres selling in the 2017/18 financial, up 86% on the $3.663 billion sold the previous year.
Neighbourhood centres are among those in the crosshairs, with deals totalling $2.82 billion in 2017/18, up 28% on the 12 months prior.
Wizel says investors are showing renewed interest in shopping centre assets, eschewing fears that online trade would damage the market.
“There had been the perception in the market that online trade would significantly damage bricks and mortar assets and that sentiment, along with strong competition from the office market, was reflected in sales volumes last year,” he says.
“But centre managers have responded well to the challenge, primarily on the back of a new entertainment and services based tenancy mix, and consumers have shown a liking for the new mix which is reflected, anecdotally, in higher foot traffic, and the steady improvement in retail trade figures.”
