Lend Lease lists Docklands Safeway supermarket premises seeking $14 million-plus

The Safeway supermarket that anchors Lend Lease’s Victoria Harbour Merchant Street retail strip in Melbourne’s Docklands has been listed for sale. 

The 2,681-square-metre supermarket on Merchant Street is the only full-line national supermarket in Docklands and the first major retail investment to be sold in the Victoria Harbour precinct. 

It was built by Lend Lease in 2008 and is leased to Safeway until May 2028 and brings in fully leased net income of around $910,000 per annum.

The sale includes two kiosks (72 square metres and 90 square metres) leased to food and beverage tenants and 120 car parks. 

Merchant Street includes 12 specialty retail outlets (totaling 1,500 square metres) at 63-93 Merchant Street and eight shops (measuring 1,300 square metres) across the road in The Gauge office building at 825 Bourke Street. 

Real estate listings suggest the strip is tightly held – unlike other parts of Docklands where many shops stand vacant – with no shops available for lease on Merchant Street and very few recent transactions. 

There are more than two dozen shops available for lease in other parts of Docklands, including in Victoria Harbour. 

The inclusion of the car park in the Safeway sale is considered a “key factor” bringing in “strong casual parking income due to its central location adjacent to Woolworths, ANZ, Lend Lease, Ericsson and Myer, and its proximity to NAB and Etihad Stadium, according to Colliers International agent Daniel Wolman. 

Wolman is marketing the property alongside Colliers International colleagues Lachlan MacGillivray and Tom Noonan. 

“Victoria Harbour’s car park market is also an exceptionally tightly held and lucrative market sector, one that is protected by planning policies aimed at minimising the construction of additional car bays within Docklands and the CBD.” 

Interest is expected from high net worth private investors and syndicators. 

A price in excess of $14 million is expected, The Australian reported. 

Victoria Harbour is home to more than 38,000 office works including 4,500 NAB staff who work in the 700 Bourke Street building, 6,500 ANZ staff who work in the ANZ building at 833 Collins Street, the Australia’s largest single-tenant office building and 1,000 Myer staff. 

There are 1,500 apartments close by and plans for another 1,800 to be built.

Lend Lease project director for Victoria Harbour Claire Johnston quotes the latest Macro Plan Dimasi report, which forecasts the current working population of 38,020 to nearly double to more than 69,980 by 2026.

“We are continuing to see strong investor demand for supermarket retail due to the strong covenant and ability to provide steady rental income through long term leases and food retail which has lower average occupancy costs than traditional retail uses,” Noonan says. 

“The demand for quality retail investment property is far outweighing supply, with only two metropolitan Woolworths transactions since February 2010, with average sub-6.5% yields, and our recent sale of Woolworths Byron Bay negotiated on a yield of sub-6%.”