Prized Coles supermarket expected to fetch about $30 million

A highly-prized Coles supermarket is tipped to sell for about $30 million and attract strong interest from private investors looking for a hedge against inflation.

Coles has put the 1.5ha Coles Toowoomba site, with a new full-line supermarket and Liquorland in the fast-growing Queensland regional hub, on the market.

The Coles has price expectations of around $30 million, according to Colliers agents James Wilson, Stewart Gilchrist and Dan Dwan.

Mr Wilson said investors are targeting supermarkets and supermarket-anchored neighbourhood shopping centres, and Coles investments are highly prized for their net lease structure paying turnover rent.

“Investors continue to target high-performing supermarket and neighbourhood shopping centre investments given the supermarket lease structure affords investors a natural inflationary hedge due to the potential for supermarket turnover rental,” Mr Wilson said.

“Coles investments are considered by investors to be class leading given they feature a prized net lease structure which pays turnover rental for online sales.”

Coles investments are prized for their net lease structure. Picture: realcommercial.com.au/for-sale

Coles Toowoomba, which opened in July 2020, has an initial 10-year net lease with eight five-year options.

The centre, on a 1.5ha site in the suburb of Glenvale 3km west of the Toowoomba CBD, is anchored by the Coles and Liquorland. There is also a coffee shop.

Coles Group Property Developments built the 3756sqm centre, which has a fully leased net operating income of $1.43 million per annum.

Mr Gilchrist expects strong interest in the sale and leaseback deal.

“We anticipate exceptional levels of interest from predominantly private capital for Coles Toowoomba, given pent-up demand for brand new Queensland freestanding supermarket investments has been building since the last ‘sale and leaseback’ transaction was recorded in 2019.”

Investors have been targeting pandemic-proof essential retailers, and assets with ASX-listed tenants and long lease terms are also highly sought-after as buyers look for defensive assets in the current economic climate.

Mr Wilson said Colliers has executed more than $400 million in value of retail middle market transactions across nine deals since May.

Investors are targeting supermarkets and neighbourhood shopping centres. Picture: realcommercial.com.au/for-sale

The agents said Coles Toowoomba has recorded strong sales since opening due to its strategic location in Toowoomba’s western growth corridor and convenient design that includes ground level parking for 187 cars.

Coles Group’s property development arm is also selling a freestanding full-line Coles supermarket in Melbourne’s Camberwell.