Coles Group renews 'Battlestar Galactica' Melbourne headquarters lease

Supermarket giant Coles Group has agreed to remain at its Melbourne headquarters on Toorak Road until 2030, in a major coup for owner, Investa Office Fund.

Coles fully occupies the 42,000 square metre office complex - known as ‘Battlestar Galactica’ for its spaceship like appearance - and has renewed their lease from the current lease expiry in November 2016 to January 2030. The lease renewal, at 800 Toorak Road, takes the weighted average lease expiry from three years to 17 years.

As part of the lease renewal, Investa (IOF) said in an announcement, the building services would be upgraded and amenities refurbished. A plot of land adjoining the office complex would also be acquired and a 1,200 bay multi deck car park constructed for Coles, subject to planning consent, it added.

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IOF's share of cost for the office refurbishment and car park is anticipated to be $28 million, and upon completion of the works, the building will generate a yield on cost of 8.2%.

"Working collaboratively with Coles to allow them to refresh their premises and meet their long-term accommodation requirements has resulted in the fund being able to forward solve a key financial year 2017 income risk, and underpins the future value of this asset with a long weighted average lease expiry", said IOF manager Toby Phelps

The Coles lease represents the largest tenant by area in the Fund’s portfolio.

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