Coles sells retail component of Westmead complex for $21 million
Coles Group has made a significant windfall after divesting the retail component of a western Sydney mixed-use development for $21 million.
The supermarket group purchased the site at 29-33 Darcy Road, Westmead, for $7.5 million in 2009, from the Trustees of the Marist Brothers, Domain Group records show. The sale of the 7371-square-metre site came with development approval for 81 apartments and one level of retail space, which was obtained by the previous owners.
The site had 2 existing houses and a St Vincent’s building before being redeveloped in 2012.
There are 81 apartments in the Coles Westmead development. Photo: Supplied
The new owner of the retail centre is a Sydney-based private investor, who bought the property on a 6.49 per cent yield.
Other supermarkets in metropolitan Sydney, which have sold in that price range, typically have development potential and are on large plots of land. While the Westmead retail centre is substantial, at 4616 square metres, it cannot be further developed as the ground-floor property is on stratum title.
In comparison, the freestanding Coles Earlwood, 10 kilometres from the Sydney CBD, fetched $28 million under the hammer in May. Coles Westmead is 26 kilometres from the city centre.
The Coles Westmead sale also included one basement level of car parking for about 160 vehicles.
The retail space is anchored by a new 15-year lease to Coles for a supermarket and Liquorland and is complemented by six service and non-discretionary food retailers. The weighted average lease expiry is 13.4 years by area.
The fully leased centre earns more than $1.3 million a year in net income, with nearly 80 per cent of the gross rent coming from Coles and Liquorland.
The freestanding Coles Earlwood sold at auction in May 2018 for $28.72 million. Photo: Supplied
Stonebridge Property Group selling agent William Blanch said the new long-term lease to Coles combined with the $3 billion of funds committed to the suburb’s infrastructure created a “great story” for the asset.
“It’s one of those rare Sydney metropolitan shopping centres, they don’t really come up too often (and) it’s within that Parramatta/Westmead growth corridor,” he said.
Western Sydney was a natural place to invest in commercial property for many people, thanks to the certainty of future growth, Mr Blanch said.
“Everyone knows that there’s such a great deal of investment both local and federal going into that part of the world and that it is such a great investment moving forward; it’s not speculative,” he said.
“Being within one of Australia’s largest health and service precincts – currently accommodating over 18,000 workers and projected to grow by an additional 11,000 by 2036 – Coles Westmead will continue to benefit from the rapid growth in the catchment.”
Other transport infrastructure plans are also underway in the area, including the Westmead Metro station and Sydney West Light Rail.
Co-agent Philip Gartland said it was a relatively quick off-market sale.
“The market received this property extremely well, with the off-market process taking only a few weeks to complete,” he said.
Not far away, Westmead Shopping Village is set to be demolished for a $70 million redevelopment reaching 16 storeys.
It will contain a hotel, build-to-rent apartments, retail, dining precinct and offices.
