Weekly Wrap

Fitzroys Weekly Wrap - 18th April 2018

Posted on 18th April 2019

000 Retail 05

322-324 Station Street, Lalor
An owner occupier purchased the high-profile former Westpac bank building for $2.455 million with vacant possession. The two-level building of 850sqm is on a 520sqm landholding with 12.2m of frontage to Station Street and 12.5m to a rear laneway.

82-90 Railway Avenue, Ringwood East
The Corcoris family sold the Paul’s Supa IGA supermarket in a $7.34 million sale and leaseback deal after 42 years of ownership. The 1,807sqm supermarket is on a 2,135sqm site on the corner of Wenwood Street and traded with a 10-year lease returning $400,000pa net.

379 Malvern Road, South Yarra
The 130sqm, home to The Fresh Flower Man, sold for $1.71 million at a 3.92% yield. It is on a 145sqm triple-fronted site with a combined 35m of frontage.

755 Burke Road, Camberwell
The 358sqm double-storey building sold for just under $5 million at a 4.2% yield, with a new eight-year lease to arts supplies retailer Riot Art and Craft on the ground floor, and a lease to Flo Dancewear on level one.

Shop 27, Northcote Plaza, Northcote
A local investor paid $1.1 million for the 106sqm Specsavers shop, at a 5.3% yield, which was offered with a 7.5 7-year lease.

389 Bourke Street, Melbourne
Taiwan-based dessert restaurant chain is opening its first Melbourne site after leasing the 170sqm shop at $243,000pa, at $1,400/sqm.

132 Puckle Street, Moonee Ponds
Homewares retailer The Phoenix and the Turtle will open its third Melbourne store after signing a 3 3-year lease over the 130sqm building at $57,000pa net.

000 Development 05

15 Anzed Court, Mulgrave
An owner occupier acquired the vacant 4,070sqm site for $2.725 million, intending to build their own custom office building.

000 Offices 05

44 Lakeview Drive, Scoresby
Securinvest Financial Group and Melbourne-based not-for-profit MOIRA leased a combined 1,900sqm within Waterman’s Carribbean Park complex. Both will pay around $300/sqm net, with Securinvest taking 750sqm in an 8-year deal and MOIRA 1,150sqm on a 7-year term.

000Industrial 05

246 Hammond Road, Dandenong
An expanding manufacturing business purchased the vacant 1,163sqm office and warehouse building for $1.76 million.

1 Technology Circuit, Hallam
Having outgrown its current premises, CHS Healthcare signed a 5-year lease over the 1,961sqm building, which is on a corner site with a 620sqm concrete yard and 33 parking spaces.

000 Talking Points 05

Student accommodation and residential development driving generational retail change in Melbourne CBD’s north:

Rents are being pushed to unprecedented levels as operators, led by Asia-based hospitality businesses, lead the rush to take advantage of the student accommodation and residential development boom in the north of Melbourne’s CBD.

In the latest deal, Fitzroys Associate, Alex Shum leased 299 Elizabeth Street to international bubble tea brand Prime’s Hai, at a record rate for the area of $3,150 per sqm. The off-market five-year deal with a five-year option for the 73 sqm space was struck at an annual rent of $230,000 net.

“The northern part of the CBD - especially along Swanston and Elizabeth Streets - is becoming increasingly sought after and targeted by Asia-based franchises who are well- known overseas.” Shum said.

“They want to get into the location as they are familiar to the large numbers of students in the area. These are brands that university students living in the surrounding high-rise developments will recognise and love from back home.”

The precinct is well supported by the surrounding student accommodation buildings and complimentary Asian food businesses, and is within close proximity to the Queen Victoria Market, Melbourne University and RMIT University.

Shum said the boom in student accommodation and residential development in recent years has subsequently driven competition between tenants and a rental rate surge.

Rents for a typical shop of up to circa 100sqm along Elizabeth Street were being leased at around $1,500 to $1,700/sqm in 2017, and were now commanding around $2,500 to $2,700/sqm – reflecting growth of more than 30% per annum in that time.

Shum and Fitzroys colleague Terence Yeh recently leased the 200sqm double-fronted building at 423-425 Elizabeth Street to dessert house chain Hui Lau Sahan from Hong Kong, at a precinct record of $400,000 per annum net on a 10-year lease, reflecting a a sizeable uplift on the previous terms struck for the property.

Data from the Department of Education shows international tertiary and post-secondary student enrolments in Victoria have jumped by nearly 44% in the past three years to almost 270,000.

The pipeline of new purpose-built student accommodation projects in the northern CBD comprises several by major global players Scape Student Living, Journal Student Living, GreenFort Capital and Wee Hur, while the Iglu and Atira projects have just been completed. Offshore player Cedar Pacific has just acquired development sites on Wills Street and La Trobe Street, to go with its North Melbourne and Carlton sites opening this year.

According to analysis of Melbourne City Council data, there are nearly 13,700 apartments in the northern CBD area above Bourke Street that are either under construction of have been approved.

“We are seeing a consistently high level of demand from experienced Asian food and beverage operators actively seeking suitable shops in the precinct for long-term leases,” Shum said.

“The Chinatown precinct has traditionally been designated as the hotspot for Chinese and other Asia-based operators. But this focus has organically shifted in recent years, and the current boom has in a sense created a new Chinatown in Melbourne’s CBD.”

Other recent deals have seen international Chinese restaurant chain Orient Hot Pot take up the former Jaycar site; Da Long Yi and New Life join Asian cuisine operators Shujinko Ramen, Hot Star Chicken, Gong Cha, Torosan Ramen, Nene Chicken, Sushi Hub, Da Long Yi, Gotcha Tea and renowned Chinese BBQ restaurant Rose Garden in the area.

The Age and Australian Financial Review on the move:

Following last year’s merger of Nine and Fairfax Media, The Age and the Financial Review newspapers will relocate from Media House, at 655 Collins Street on the corner of Spencer Street, to Nine’s headquarters at 717 Bourke Street.

The 16,600 sqm Media House was custom-built for Fairfax by Grocon in 2009, and is now owned by GPT Wholesale Office Fund.

3AW and community newspapers remain, operating from the top of the building. Existing tenant NBN Co, which occupies levels 4-6, has signed a sublease over 5,600sqm across levels 1-3 beginning from July. Staff will be relocating from 7,500sqm at 750 Collins Street, while NBN Co has recently taken up 20,000sqm at Tower 5 of Walker Corporation’s Collins Square in addition to its 14,000sqm at Melbourne Central.

Disclosure:Fitzroys Property Wrapis 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 2019 Fitzroys.