Weekly Wrap

Fitzroys Weekly Wrap - 29th April 2022

Posted on 29th April 2022

000 Retail 05

257 Elizabeth Street, Melbourne
Offered for the first time in 53 years, the vacant 3-storey, 201sqm building sold to an offshore investor for $4.4 million.

2072 Frankston-Flinders Road, Hastings

The 1,911sqm site sold for $2.325 million on a 5.46% yield. It is leased to car wash Hastings Super Shine on a brand-new 5-year lease with options to 2042, returning $126,890pa.

34-38 Princes Highway, Sale

The 6,177sqm nursery site sold for $2.01 million, on a 5.97% yield, with a brand new 5-year lease plus options returning $120,000pa plus GST.

532 City Road, South Melbourne

The 2-level, 135sqm shop and dwelling on a 159sqm Capital City-zoned site sold for $1.4 million, on a 2.74% passing yield with a monthly tenancy in place.

238 Bell Street, Coburg

A local buyer paid $720,000 for the 156sqm building that was home to Italian video store Tempo Video Centre from 1985 until 2019. It is on a 202sqm site zoned Commercial 1.

000 Offices 05

142 Johnston Street, Fitzroy
A local investor paid around $3 million for the 292sqm strata office home to the electorate office of Australian Greens leader Adam Bandt. The Australian government has 3 years remaining on its lease, which returns $159,000pa.

000Industrial 05

31 Progress Street, Mornington
The 1,500sqm showroom, office and warehouse building sold for $3.335 million. It has a 3-year lease option commencing this month and a further 3-year term, currently returning $144,615.

33/41-49 Norcal Road, Nunawading

A local owner-occupier bought the 617sqm, 2-level showroom, office and warehouse property with 11 basement car spaces for $2,865,000.

14D Levanswell Road, Moorabbin

The vacant 254sqm office and warehouse on a 298sqm site sold for $820,000.

3/37 Rooks Road, Nunawading

The 277sqm office and warehouse was leased at $46,000pa.

000 Development 05

15 Weir Street, Glen Iris
The 8,687sqm site home to Glen Iris Mitre 10 sold for over $30 million. Mitre 10’s owner Metcash has a ground lease and pays around $1 million per annum. The site has been used to sell building materials since 1905.

000 Specialised 05

6 Huon Park Road, Cranbourne North
Inspire O2 Education leased the newly-completed 629sqm early learning facility on a 2,000sqm site for 15 years, with further options to 2057, at $367,000pa.

000 Talking Points 05

Blue-Chip Church Street, Brighton Trophy Sells for $16.2m
Church Street, Brighton has seen its most significant retail investment transaction in years, with the $16.2 million sale of a commanding, multi-tenanted building in the absolute heart of arguably Australia’s premier shopping strip.

Fitzroys’ Chris Kombi and Mark Talbot, in conjunction with Aston Commercial, sold 71-73 Church Street & 36 Carpenter Street following an Expressions of Interest campaign that generated interest locally and from across Australia.

The fully-leased heritage-style 990sqm building is on a significant 931sqm corner landholding and offers a diversified income stream from strong and secure lease covenants, headlined by global sportswear giant Nike, together with national footwear retailer Ecco, popular bakery Laurent, and office tenants White Fox and 2 Construct.

The sale price reflected a sharp blended 3.8% yield, and a remarkably high land rate of $17,363/sqm and building rate of $16,480/sqm.

“This was undoubtedly one of the best strip retail investment opportunities we’ll see come to the market in 2022,” Kombi said.

“Most of the enquiry came from passive investors attracted to the strong lease profile, significant passing income and excellent corner position within Melbourne’s strongest-performing strip retail centre,” he said.

“Investors consider income-producing, well-located bricks and mortar assets with long-term leases to quality tenants to be among the most secure investments in the COVID-normal and low interest rate environment. We’re also seeing more investors anticipating higher inflation and turning to commercial property in favour of having money sitting in the bank.”

“Prime Melbourne shopping strip assets offer an investment prospect that is simply hard to beat, and Church Street, Brighton is notoriously tightly held. As expected, this combination of factors was reflected in the national enquiry and hugely competitive offers we received.”

The property is just the 3rd to have sold along the strip since September 2019 - and all 3 of them have sold through Fitzroys. They were the NAB branch at 35 Church Street, which sold for $6.105 million at a 3.5% yield, while last year 13 Church Street, home to international retailer Oroton, sold for $6.07 million at 2.5%.

The 71-73 Church Street & 36 Carpenter Street site enjoys a high level of foot traffic and is surrounded by some of Australia’s most popular fashion and lifestyle retailers that Church Street, Brighton is known for. It is equidistant to Woolworths and the iconic Dendy cinema complex, and sits amongst leading retailers including Scanlan & Theodore, Mecca, Witchery, Kookai, and major banks.

“Investors recognise that Melbourne’s shopping strips have demonstrated their resilience over the past 2 years, and none more so than Church Street, Brighton,” Talbot said.

According to Fitzroys’ latest Walk the Strip report, Church Street, Brighton again held the title for the lowest vacancies among Melbourne’s shopping strips, with an ultra-low rate of just 0.7%. Underlining the strength of the catchment, the proportion of specialty tenants such as Nike and Ecco has increased over the past 3 years to 58%, giving it the highest fashion and discretionary retail component of any strip in Melbourne.

Fitzroys has now sold $41.585 million of worth of properties within the absolute prime of major shopping strips across Melbourne in recent weeks, including properties in Burke Road, Camberwell; Chapel Street, South Yarra; Glenferrie Road, Malvern; and Glenferrie Road, Hawthorn.

Another Supermarket Trades on Tight Yield
The Coles supermarket property in Lalor has sold to a local investor for $13.76 million, on a yield of 2.98%.

The 2,783sqm property includes a Liquorland and is on a 3,365sqm site. It has a lease running to 2028 with 4 5-year options and returns $413,000pa.

The vendors had bought the property in 1991 for $2.16 million.

The deal follows Fitzroys’ sale of Woolworths Eltham for $35 million at a 3.3% yield. The modern 4,249sqm full-line supermarket is on a 9,044sqm site and returns $1.166 million pa.

Supermarket assets have traded on sharp yields recently. A Woolworths in North Balwyn sold for $45.7 million on a 2.99% yield, a Coles Local on Glenferrie Road in Hawthorn sold for $24.5 million at 1.9%, and a Woolworths in Blackburn South sold for $29.3 million at 2.46%.

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.