Weekly Wrap

Fitzroys Weekly Wrap - 10th June 2022

Posted on 10th June 2022

92-96 Franklin Street, Traralgon
National Retail Group bought the 506sqm building leased to Chemist Warehouse for $3 million, on a 4.5% yield. The building is on a 461sqm triple-fronted Activity Centre-zoned site and returns $135,331pa from a lease that expires in 4 years with no remaining options.

333-339 Johnston Street, Abbotsford

The 900sqm showroom and office building on a 700sqm Commercial 1-zoned site sold for $5.25 million to E&S Trading’s Rob Sinclair, the long-time occupier of the property.

331 Johnston Street, Abbotsford

E&S Trading also bought the old pub building next door for $1.65 million. The 200sqm, 2-level building is on the corner of Hunter Street.

194 Smith Street, Collingwood

An investor bought the 135sqm shop for $1.69 million, on a 4% net yield. It has a renewed 5-year lease to Vietnamese eatery Xeôm.

740 Chapel Street, South Yarra

Dental 1 signed a 3+5+5-year lease over the 108sqm space at $76,500pa net.

601 Blackburn Road, Notting Hill
St John Ambulance signed a 15-year lease at $1,023,000pa net for the space, which it will use for first aid training, health services and public and private events.

152-156 Yarra Street, Warrandyte

A local landscape design business leased the self-contained 1st floor office space for 3 years, at $208/sqm net.

280 Nicholson Street, Fitzroy

Promotional products supplier Wholesale Promotions Warehouse leased the 104sqm office at $43,500pa gross, or $418/sqm.

669 Blackburn Road, Clayton
An investor paid around $17 million for the 1.4ha showroom and warehouse site with Princes Highway frontage, which is currently home to Fowels Auctions on a lease until 2028 with no options that returns $569,637pa net.

227 Maroondah Highway, Ringwood

An owner-occupier bought the 3-level 719sqm showroom building on a 372sqm site zoned Commercial 1 for $3 million.

5 & 6/677 Springvale Road, Mulgrave

Thomson Group Trading leased the 2,103sqm warehouse for 5 years at $120/sqm.

363-365 Johnston Street, Abbotsford
Zoned Commercial 1, the 305sqm with a single-story 230sqm building sold with short-term income for $2.255 million.

19-21 Great Ocean Road, Wye River

A New South Wales-based private investor bought the freehold of the Wye Beach Hotel for more than $5.5 million from long-term owners Paul and Tess Brown. The existing tenant will continue operating the recently upgraded venue, which is on a 2,211sqm oceanfront site.

215-217 Canterbury Road, Canterbury

The partly-occupied 378sqm medical centre on a 334sqm site sold for $3.4 million, on a 2.6% passing yield. Fully leased, the yield would be 3.5%.

Singapore-Based Buyers Acquire Melbourne CBD Office Buildings
Investors are backing the recovery of the Melbourne CBD office market.

Singapore-listed CapitaLand Investment has bought the 22-storey tower at 120 Spencer Street, opposite Southern Cross Station, for $321.25 million.

Formerly the headquarters of Melbourne Water, the 32,000sqm is now 97.5% leased to tenants including WeWork, CQU Australia and RedHill Education and sold on a yield of above 5%.

The vendor, CBRE Investment Management, bought the building in 2017 for $250 million from Anton Capital, which had paid $165.2 million to Harry Stamoulis for the asset just over a year earlier.

Elsewhere in the CBD, Singapore-listed SLB Development has paid $40 million to Victorian University for its former 225 King Street campus building.

The vacant 12-storey building, near the corner of Lonsdale Street, has changed hands just as Victoria University moves into its new 29-level vertical campus at 370 Little Lonsdale Street, a $385 million tower developed by ISPT and leased to the University on a 30-year term.

Victoria University also sold its 300 Flinders Street campus building last November for $80.8 million to fund managers Marprop Real Estate Investors and Futuro Capital.

That followed RMIT University selling a 14-storey strata property with 23,000sqm of floorspace at 235-251 Bourke Street to Futuro Capital for $133 million with a 5-year leaseback, while Swinburne University sold the vacant 7-level Invicta House building at 226-232 Flinders Lane after just 2 years of ownership for around $40 million.

Singaporean Group to Develop $215m Logistics Estate
Meanwhile, Singapore’s Frasers Property Industrial has bought a 23.4ha industrial land parcel in the growing suburb of Cobblebank for about $42 million.

It will develop a $215 million logistics estate at the 1-15 Ferris Road site. The estate is expected to have more than 100,000sqm of large-format warehousing.

Industrial land values are continuing to rise sharply. The vendor, developer Baycrown Property Group, bought the property for $11.15 million just four years ago.

Neighbourhood Retail Centre Sells for $5.6m
A neighbourhood retail centre on a substantial 1,205sqm Boroondara site has sold for $5.6 million.

Fitzroys’ Shawn Luo, Chris James and David Bourke sold Belmore Plaza, at 399 Belmore Road, Balwyn at a very sharp 3.8% initial yield on behalf of a private investor.

The buyer was a local investor backed with Asian capital who will hold the property as an investment in the medium term and look at development in the future.

Encompassing 8 titles offered in 1 line, Belmore Plaza comprises a 2-storey 867sqm building plus on-site parking with flexible Commercial 1 zoning, within the Coles-anchored Balwyn East Shopping Centre village.

It returns passing rent of $226,000pa across multiple tenancies, including Chinese restaurant Eastern Bell, Nuski’s Swiss Patisserie, clothing boutique Bonnie Parker, and Netsquare Computer Services.

The campaign generated over 110 enquiries from investors and value add buyers before the property sold at a hugely competitive auction.

“Here, the underlying land value was a huge attraction. Commercial 1-zoned sites of this size in Boroondara - let alone right near a major supermarket - are incredibly rare,” James said.

“Investors were also willing to take on the small leasing risk given how strongly local centres have traded over the past two years as Melburnians reconnected with their local communities.”

The site offers excellent development prospects including for residential, retail and mixed-use, with Boroondara offering a prized affluent residential catchment, a fast-growing office market and excellent hospitality and lifestyle amenity, making it attractive to residents and workers.

“Close-by suburbs such as Hawthorn and Camberwell have growing office markets and are seeing strong residential and commercial development activity as Melburnians seek vibrant, well-connected inner-suburban locations, particularly while flexible working arrangements are in vogue,” James said.

Luo said demand from Asia-backed capital has surged since the reopening of international borders in February.

“We’ve seen more Asian capital-backed buyers competing for a range of sites across Melbourne in recent months, from trophy retail investments to sites with strong development prospects, adding to the depth of enquiry and competitiveness of campaigns.

“Australia and Melbourne have clearly retained their safe-haven status across asset types over the past 2 years.”

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.