The $180m mall Woolies liked so much it bought it

That left Woolworths with little choice but to purchase the sub-regional shopping centre if it wanted to secure its long-term future in the growing suburb. But as the anchor tenant, Woolworths also had an edge on prospective buyers – including other supermarket operators – with a pre-emptive right to match rival offers for the near-20,000 square metre mall.

Coles was already breathing down Woolworths’ neck in the neighbourhood with plans approved for a new $200 million site for Coles and its discount chain Kmart, next door to Plumpton Marketplace on Jersey Road.

The Plumpton transaction gives a rare, real-time view into the high-stakes real estate competition between the nation’s biggest grocers. Their property moves can typically take years to play out as they jostle for position across the suburbs of Australia.

It also comes as the market power of Woolworths and Coles is put under the microscope by the competition regulator.

While grocery prices are the main focus of that inquiry, the Australian Competition and Consumer Commission has also raised tough questions about land banking – the practice of acquiring real estate to shut out competitors.

The biggest players are building up considerable portfolios. Woolworths has an interest in 110 undeveloped sites for new stores around the country, Coles has 42 on its books and discount chain Aldi holds 13 undeveloped sites, according to an ACCC analysis.

As well as rival bidders at Plumpton, Woolworths was also racing against a rising market. Shopping centres have been one of the first asset classes to recover after a nearly two-year slump across much of the commercial property sector.

The yield of the Plumpton transaction was just under five per cent, a relatively sharp yield by industry standards and an indication of the price Woolworths was willing to pay. By contrast, yields on Sydney’s top CBD skyscrapers are in the 6 per cent range.

Woolworths has been three decades in residence at the Plumpton mall after building it in 1994 originally. The real estate changed hands several times before TCorp, the NSW public sector investment platform, bought it in 2022, under an investment mandate managed by Lendlease.

“We’ve been a tenant in the Plumpton Marketplace, through our Woolworths and Big W businesses, since it opened in 1994,” a Woolworths spokesman told The Australian Financial Review.

“We look forward to continuing our operations within this centre and to continuing to service the local community for many years to come.

Turf war history

Woolworths and Coles have shown themselves willing to step directly into the property market over the years as they tussle for supermarket supremacy.

In March, Woolworths forked out $51 million to buy a small suburban mall in Melbourne’s northern suburbs where it is already the anchor tenant.

And two years earlier, it swooped on Miranda Mall, in Sydney’s south, where Coles is the anchor tenant. It paid $68 million – or around double that mall’s market value at time – giving it the option to hang its own shingle over the property when its rival’s lease expires in 2029.

Last year, Coles paid almost $100 million for a huge site in Balaclava in Melbourne’s inner east. It operates a supermarket at the site, securing its position and preventing Woolworths – which has an outlet directly opposite – from becoming the dominant player in the busy suburb.