Summerhill competition on the line
PLANNING changes recommended by the ACCC's grocery price inquiry last week could affect supermarket competition in Reservoir as Viento Diversified Property Fund sells its Summerhill Village Shopping Centre.
While Summerhill's major tenant, Safeway, is not on a lease deal that would block the operation of rivals such as Aldi or Franklins near them, Safeway could lose any position to negotiate a special lease deal in the future if the ACCC's recommendations are adopted.
"If the use of restrictive covenants is phased out, Safeway will no longer be able to draw up a contract with the new owner to impede new entrants into the centre," said a retail source who declined to be named.
The ACCC inquiry raised concerns about provisions in supermarket leases of major supermarket chains that can stipulate a decrease in rent for the major operator if a competitor moves in.
The ACCC's recommendations also include overhauling planning laws to remove some barriers to new supermarkets opening also a plus for shopping centre owners sitting on big blocks of land.
Neighbourhood shopping centres sitting on extra-large blocks of land, as defined by the Property Council of Australia in its Shopping Centre Directory, include the 4846-square-metre Ferntree Plaza Shopping Centre in Ferntree Gully, which sits on a five-hectare block, and the 3580 sq m Ringwood Plaza which sits on a 2.1-hectare block.
In 2004, Stockland bought the 1.86-hectare Tooronga Village Shopping Centre in East Hawthorn from Coles Myer for $30 million, and is building a $560 million mixed-use village with shops, offices and apartments there.
Knight Frank selling agent Michael Hede expects interest for Summerhill Village to come from developers who may plan to expand on the 11,500 sq m of undeveloped land, most of which is used as a 383-bay car park.
Mr Hede expects the property to sell for between $17.5 million and $19 million after a tender campaign closing next month.
Aldi property director Tom Daunt declined to say whether the budget supermarket chain was interested in the site, but said Reservoir had the necessary population to justify an Aldi store. "Anywhere there are 15,000 to 20,000 people, an Aldi store can operate," he said.
"We're going as fast as we can we're just limited by things like zoning and planning. We can locate an Aldi store that can trade quite happily and co-exist very well with other retail competitors."
Viento Diversified Property Fund is managed by the Viento Group, formerly WRF Securities. It bought the site in 2002 for its First Enterprise Property Syndicate, which has since been rolled over.
The single-level shopping centre occupies just over a third of the 1.8-hectare block, and abuts a Target and a Coles supermarket. Summerhill's biggest tenants are Safeway, which occupies 2474 sq m, and the Summerhill Hotel.