Finding tomorrow’s hot property, TODAY

Woolworths’ Expansion into Residential Development: A Response to Changing Shopping Trends

Supermarket giant Woolworths has submitted a rezoning request for its Neutral Bay site, as part of its strategy to develop apartments above supermarkets in Sydney, Melbourne, and Brisbane. The company claims that the housing projects are a response to changing shopping trends, which have also resulted in initiatives such as drive-through shopping and small-format grocery stores. Apartments will also be built in Waterloo, Rose Bay, Elsternwick, and Kangaroo Point. However, Woolworths faces opposition to these plans, as also seen in the reactions to its developments in Neutral Bay and Elsternwick.

Zoe Baker, North Sydney mayor, claims that the council opposed the plan for Neutral Bay because it exceeded building heights and floor space ratios. She added that rezoning was not necessary as upgrade to the supermarket could have been done without taller buildings. This has led critics, including Baker, to argue that Woolworths would receive a massive increase in value without providing any affordable housing units.
Andrew Loveday, Woolworths’ director of property development, claims that mixed-use developments are a response to consumer demand for local shops and services, especially given congestion on roads and public transport due to densely populated cities. He adds that controlling development outcomes for mixed-use developments allows the company to prioritise customer and community concerns over residential development objectives. He claims that Woolworths has been involved in property development for years, but the recent move into building apartments reflects the trend towards higher population densities in metropolitan locations.

Loveday also noted that the company differs from other property developers because it plans to remain in the development for decades to come. Anthony Pirrottina, director of investment sales at Knight Frank, claims that retailers are moving away from stand-alone stores as competition for inner-city sites becomes more intense. Pirrottina argues that supermarkets face fierce competition from other developers for sites large enough to build a store. He continues by noting that retail outlets of all types, including large-format retailers, fast food chains, and car dealerships, are moving away from stand-alone stores and instead are being drawn towards mixed-use and integrated developments in cities.

Pirrottina states that building apartments not only provides Woolworths with an immediate customer base, but also increases the chances of gaining approval for developments in areas with rapid population growth, such as Waterloo. Estelle Grech, planning policy manager at the Committee for Sydney, agrees and claims that having large, single-use buildings in well-located areas does not make sense. She adds that Woolworths has evolved to meet changing consumer demands, as people no longer have to rely on driving to get their groceries due to more time-poor, working families.

The change in consumer behaviour has prompted other supermarkets, such as Coles and Aldi, to open smaller-format stores; these proposals have also faced opposition from residents. Aldi, for example, has targeted city dwellers and commuters with its “Corner Store” format, opening locations in areas such as Darlinghurst and Newtown in Sydney, and Prahran and Fitzroy in Melbourne. A spokesperson for Coles claims that the company focuses on property developments that result in good retail, supermarket outcomes and that they have delivered within mixed-use spaces, such as inner metropolitan areas with apartments, offices, and medical centres.

Woolworths’ expansion into residential development comes after warnings from local councils and small business owners about the potential invasion of suburban shopping precincts by major retailers, following new state laws that aim to make it easier to open businesses.


Subscribe to our newsletter today and receive a FREE copy of How To Identify Hotspots