Weekly Wrap

Fitzroys Weekly Wrap - 18th February 2022

Posted on 17th February 2022

133 Great Ocean Road, Apollo Bay
A local restaurant operator bought the vacant single-level 132sqm building for $1.453 million. It is on a 419sqm site zoned Commercial 1, with a 9.14m frontage and rear access.

576-584 Chapel Street, South Yarra

A trio of adjoining shops sold for $15.9 million, at a 3.5% yield. They are leased to Saba, Gorman and Marimekko.

138 Burgundy Street, Heidelberg

The adjoining 2 retail properties of a combined 244sqm sold for $4.7 million, at a 2.7% yield. They are on a 514sqm site zoned Commercial 1 with a 12.8m street frontage, on-site parking and rear laneway access.

959-967 High Street, Armadale

Japanese salad purveyors Fishbowl leased the adjoining 88sqm and 90sqm tenancies within the mixed-use Alara project for 10 years with a 5-year option. They will pay $135,000pa net, or $760/sqm.

254 Collins Street, Melbourne

Crystal jewellery retailer Swarovski leased the 2-level 227sqm space for 7 years at $600,000pa.

4 Prime Street, Thomastown
The 2-level, 273sqm office unit sold for $700,000. It has a monthly tenancy on the 1st floor and a vacant ground level, and includes 5 parking spaces.

454 Collins Street, Melbourne

WorkJam Pty Ltd is moving to a new CBD location, leasing 120sqm for 1 year on level 7 of the building at $135,000pa.

22 Reserve Street, Preston
A private investor paid more than $8 million for the 3,654sqm office and warehouse on a 4,916sqm corner site zoned Industrial 1. The property has a 6+5-year lease from 2018, returning $450,000pa net plus outgoings and land tax, to a tenant that has been at the site since 1994.

22 & 24 Brunsdon Street, Bayswater

A local developer paid $3.21 million for the 3,894sqm site with a 127m frontage. They will utilise the existing permit for a development of 7 standalone office and warehouse units.

46-48 Assembly Drive, Tullamarine

IAG Group subsidiary Motorserve signed a 5-year lease over the 1,250 sqm space at $125,000pa.

194 Bridge Road, Richmond
A local investor and developer bought the former Australia Hotel building for $3.85 million. The building has been repositioned and is now occupied by several tenants, and sold with a permit for a 5-level, 920sqm office development.

94A Bulla Road, Bulla

Telstra sold the triple-fronted 2,435sqm site to a developer for $650,000. Telstra retains a telecommunications facility on part of the site, which has also been partly leased to a stock feed supplier.

Logos Buys Reservoir Infill Site
Logistics heavyweight Logos has bought a prized industrial infill site in Reservoir in an off-market transaction negotiated by Fitzroys.

Fitzroys’ Brent Glassford and Marco Sandrin managed the deal.

The 7.8ha site at Radford Road will be used for a prime-grade last-mile logistics estate.

“Connectivity is front-of-mind for investors and developers as the e-commerce boom and COVID period emphasise the importance of efficient logistics and supply chain networks,” Glassford said.

“There is a severe shortage of existing and developable industrial land, and infill sites of scale close to the CBD and major arterials are among the most prized real estate in the current environment.”

“Developers and institutional investors will continue to focus on acquiring land for development amid the surging demand for logistics space. We expect the huge imbalance between supply and demand to continue for the foreseeable future.”

Sandrin said the site presented an increasingly rare opportunity to develop a last-mile logistics hub just 13km from the CBD and close to major roads providing easy access to the rest of Melbourne. The site provides easy access to the Western Ring Road, Hume Freeway and Tullamarine Freeway.

“Opportunities of scale close to the CBD are scarce and this was reflected in the strong outcome. Ultimately, a new product will be brought to the market and given its excellent location will be really well received,” Sandrin said.

Built-to-Rent Sites Snapped Up
Melbourne’s growing build-to-rent sector will have 2 new projects added to its pipeline after sites in the inner-north were bought by Make Ventures and global investment manager Hines.

Make Ventures bought the 1.41ha Toyota dealership site at 687 High Street, Preston for about $40 million. The corner site is within a priority development zone and is currently leased to Eagers Automotive, which could occupy the site for up to another 15 years under existing lease terms, returning more than $1 million net pa.

The site could support between 500 and 600 apartments and 5,000 to 6,000 sqm of retail and commercial space.

Make Ventures is linked to developer Assemble, and last year paid $30 million for a Kensington site that will be developed by Assemble to comprise social and commercial market housing, including 400 build-to-rent dwellings.

Meanwhile, Hines has bought the 3,068sqm site at 36-58 Macaulay Road – looking out over the North Melbourne Football Club’s Arden Street base – for $30 million, with plans to develop a $230 million build-to-rent project comprising dual towers with around 220 apartments.

The site is in the middle of the Arden precinct that has been earmarked by the Victorian government as an urban regeneration zone, and a new train station is currently being constructed close by as part of the Metro tunnel.

Also in the inner-north, Hines last year bought a 4,247sqm site in Brunswick where it will build a $250 million, 250-unit built-to-rent complex, while ASX-listed Mirvac and Milieu are planning a 527-unit build-to-rent project in the suburb.

Melbourne is attracting the bulk of build-to-rent projects in Australia, with a number of projects slated for city edge locations such as Southbank, Docklands and next to the Queen Victoria Market, and inner suburbs including South Yarra, Kensington and Footscray.

Active developers in the sector also include Gurner, Samma Property Group, Greystar and Oxford Properties.

Investors, Owner-Occupiers and Developers Pursue Inner-City Office Buildings
One of the most versatile commercial sites on the cusp of Melbourne’s CBD has sold for $8.05 million to a local owner-occupier looking for a new office headquarters.

Fitzroys’ Chris James and Rob Harrington sold the high-profile property at 163-171 Clarendon Street, on the corner of Market Street, on behalf of a private vendor. The sale price represented a building rate of $8,164 per sqm and land rate of $13,400 per sqm on the developable area.

The 657sqm corner site has a two-level 986sqm commercial building ready for occupation and 10 on-site car parks, while the site’s Commercial 1 zoning and position within the South Melbourne Central Activity Centre zone offered incredible development opportunities in a heavily active commercial and lifestyle precinct.

James said the property attracted 75 enquiries from a mix of predominantly owner-occupiers and developers looking to get into a prime city fringe location, with a number of bidders looking to reposition the building.

“Owner-occupiers were looking at the site for a new headquarters, keen to take the incredibly rare chance to acquire their own premises on the edge of the CBD and in a thriving location offering some of Melbourne’s best lifestyle amenity,” he said.

The property is moments away from the eateries and hotels of the Clarendon Street lifestyle precinct, the South Melbourne Market, and South Melbourne Central shopping centre.

Meanwhile, James and Fitzroys’ David Bourke sold 34 Garden Street, South Yarra for $7.7 million at a remarkably sharp 2.47% yield.

A local private investor won out from a deep field of investors and developers. The sale price also reflected a strong land rate of $16,450 per sqm.

Zoned Commercial 1, the 900sqm showroom, warehouse and office building is on a 468sqm site just moments away from the Jam Factory and the hospitality and lifestyle amenity of famous Chapel Street. It is leased to Australia and New Zealand custom window furnishings supplier Lovelight.

Bourke said the strong enquiry reflected the growing interest from investors and developers in South Yarra.

“With the neighbouring Richmond and Cremorne markets becoming ultra-competitive, more tenants are looking at South Yarra and its vibrant lifestyle offering as a home for their business, and investors and developers are taking note,” he said.

Disclosure: The weekly Fitzroys Property Wrap is for information only on transactions in the Melbourne property market. Fitzroys provides this information as a public service. We are not purporting that all sales and leases within this report were transacted by Fitzroys. Terms/Privacy © Copyright 2021 Fitzroys.