The Woolworths supermarkets in Wagga Wagga have sold for $20 million in an off market transaction, brokered through Savills Retail Investments to Adelaide Fund Manager Parkstone.
This sale was transacted late in 2021 and has recently settled and reflects a tight yield of sub 4.5%. It also represents one of only two freestanding supermarkets sold in NSW during 2021. These two sales have transacted at a yield some 100bsp sharper that similar deals in 2020.
Prominently located at 18-34 Gurwood Street in North Wagga the site occupies over 9,000 square metres of land to the north of the city centre, with two street frontages and a flexible B3 Commercial Core Zoning.
Steven Lerche of Savills said, “The property was transacted with a new 10-year lease extension commencing mid-2022, that involved a major store refurbishment.”
Low yields for single-tenanted assets reflect the attractiveness of ‘sit and forget’ investments and the robust convenience retail sector, that continue to outperform the general retail market post-COVID.
Lerche added “there is a deep buyer pool for a retail asset of this calibre, the price and yield achieved for Wagga off-market surpassed yields paid for Woolworths Orange and Lithgow in 2020, (deals that were also brokered by Steven Lerche and Andrew Palmer of Savills).
There have been several sales in the Sydney and Victorian metropolitan market, that have sold at tighter yields, including the Woolworths in Schofields that recently transacted for $37.5m at circa 3.75% and Woolworths, North Balwyn for $45.7m for under 3%. Metropolitan supermarket sales generally come with opportunities such as future mixed- use development, thereby commanding a higher prices and sharper yields.
Regional retail sales include Coles Victor Harbour in South Australia, which achieved a price of $33.5m at a yield of 4.1%, and Coles Woodend (approximately 60 minutes drive outside Melbourne) for $33.3m at 4.33%, both were brand-new developments completed by Coles. Another regional sale was Woolworths Kyabram, also sold in 2021 for $23.8million at a yield of 4.84%.
Single-tenanted, minimal management investments leased to major tenants have long been one of the most sought-after retail investment categories, and this has been further exacerbated by the pandemic.
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