A Coles supermarket at Mentone, in Melbourne’s south-east, has sold on the tightest yield for a retail asset in the state so far this year after a lunchtime auction pushed the price well past the vendor’s reserve.
At 81 Mentone Parade, the property, held in an estate, was sold under the hammer last week for $15.3 million on a 3.4 per cent yield. That represents the tightest yield since Coles Clayton, also in the city’s south-east, sold on a record 2.57 per cent yield in March last year.
CBRE’s Mark Wizel, who managed the sale with Justin Dowers and Kevin Tong, said inquiry had been “through the roof”. Two Chinese investors – one was the eventual purchaser – flew in for the auction.
“Standalone supermarkets are standout performers in pretty much any market,” Mr Wizel said.
“When you add a 10 x 10-year lease to Coles and long-term development upside, in a sought after bayside locale, the property is going to sell well.”
The property comprises a freestanding, 2854-square-metre supermarket leased to Coles at a current net rental of $519,785 annually.
The Coles Clayton sold for $17.115 million. The previous record yield for a retail asset was struck with the sale of Woolworths Middle Brighton which sold for $32 million on a 3.8 per cent yield in 2016.
Mr Wizel said the increase in demand had put a brake on any blow-out in yields.
“This year we have seen yields hover around 5.5 per cent following an average closer to 4.5 per cent over 2018 but this result unambiguously indicates demand for this product remains very strong,” he said.
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