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Coles lists Boronia supermarket and Kmart store

Coles lists Boronia supermarket and Kmart store

Coles has listed for sale its 10,000m2 GLA Boronia supermarket and adjoining Kmart store. The Floriston Road property located in Victoria’s City of Knox, includes a new 12-year lease to Coles Supermarket and an established Kmart DDS lease (expires 2025) with 100% of an estimated net income of $2.05 million derived from leases to ASX listed retailers Coles Group and Wesfarmers.

The Coles and Kmart stores form part of the Boronia Mall and are adjacent to the Boronia Central retail centre. Together, the Mall and Boronia Central comprise a broad retail/commercial offering including Australia Post, Liquorland, a newsagency, a bakery, a medical clinic, and numerous other specialty retailers and services. The two centres also provide both undercover and at grade parking for Coles and Kmart customers.

Significant upgrade works have also been recently completed with new lifts, travellators, plant, and carpark works, including a smart carpark system, to improve the shopping experience.

The precinct is designated as a Major Activity Centre in Plan Melbourne, which provides planning support for a range of uses including core retail, commercial and residential.

CBRE Director Investments, Mark Wizel, who is marketing the property with Senior Director Retail Investments, Justin Dowers, said he expected a strong response from hungry and cashed up investors looking for yield in a market short of quality investment stock.

“The beauty of this centre is it has the benefit of two major national anchor tenants, but without the exposure to specialty income. The security and overall quality of the income is absolutely A+, which is further underwritten by a strong track record of high trading performance Non-discretionary spend tenants, like Coles, with an exceptional track record of performance, add another level of tenancy security which is particularly attractive in uncertain times,’’ Wizel said.

He said the Kmart store added the highest level of tenancy diversity to an asset which was particularly well placed for income growth and future development potential.

“The main attraction is obviously the blue-chip tenancy profile, but the property also offers strong underlying land value with major long term development upside,’’ Wizel said.

Dowers said the fact that there was a lot of offshore and local money looking for a home in property, at a time of global economic uncertainty, and that quality assets were in short supply, would ensure the asset attracted a strong field of suitors.

“Asian buyers in particular have demonstrated a penchant for retail assets of late with those properties offering significant land components at the top of the list,’’ Dowers said.

He said both tenants were performing above industry benchmarks, showing year on year growth, while Kmart was `significantly under-rented’ reflecting a rate of $108/m2 net.

“Like most parts of Melbourne, Boronia has seen strong population growth and will continue to benefit from that growth, providing retailers and other businesses with confidence in the region’s long term prospects. Both Coles and Kmart are showing strong performance indicators and it is anticipated that both tenants will be paying the landlord percentage rent in the near future,’’ Dowers said.

Located less than one hour east of Melbourne CBD, Boronia is a major centre within the growing City of Knox. Knox has a population of circa 164,000 (ABS/.id) and is expected to add another 28,000 residents – a 17% growth rate – to reach 192,407 by 2041.

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