Weekly Wrap

Fitzroys Weekly Wrap - 1st July 2022

Posted on 01st July 2022

283 Clarendon Street, South Melbourne
An investor paid $2.02 million for the 166sqm building on a Commercial 1-zoned site, on a 3.4% net yield. Chevapi Grill has a 5+5+5-year lease returning $78,785pa plus outgoings and GST.

2432 Frankston-Flinders Road, Bittern

Mainland China investors bought the IGA-anchored Bitternfields Shopping Centre for around $12 million, on a 4.08% yield. The 1,670sqm neighbourhood centre is on a 5,527sqm site with 61 parking spaces includes a small-format IGA supermarket and 12 specialty shops. It returns $457,603pa.

1331 Howitt Street, Wendouree

Fair Price Furniture sold its 2,003sqm showroom to a Bedshed franchisee for $3.5 million. The space is directly opposite Harvey Norman, Plush and Snooze.

519-539 St Kilda Road, Melbourne

The 120sqm strata retail space occupied by 7-Eleven sold for $3 million, on a 4.85% yield.

304 High Street, Kew

The vacant 270sqm building on a 308sqm site zoned Commercial 1 sold for $2.61 million.

99-101 Lygon Street, Carlton

Private investors bought the 2-level building formerly home to Melbourne’s oldest pizzeria, Toto’s Pizza House, for around $2 million. Toto’s had traded from the 250sqm property since 1961 and closed in 2020. In 2007, it became the 2nd pizzeria to be inducted into the World Pizza Hall of Fame in New York.

503 High Street Road, Mount Waverley

A local GP plans to open a new practice within the former milk bar, after buying the vacant 188sqm building for $1.2 million. It is on a 203sqm Commercial 1-zoned site.

52 Murphy Street, Wangaratta

An investor bought the 99sqm shop for $686,000, on a 4.99% yield. It is leased to Noodle Mas on a renewed 3-year deal plus options to 2033.

112 Lower Plenty Road, Rosanna

A health provider leased the 265sqm premises, which were purpose built for Commonwealth Bank, for 5 years at $65,000pa.

Ground & Level 1, 633-639 Little Bourke Street, Melbourne
An owner-occupier bought the vacant 2-level 239sqm office for $2,888,888.88.

259 Jasper Road, McKinnon

The 2-level 188sqm building sold for $1.16 million with a new 5-year lease to The Mould Doctor, returning $36,600pa in the 1st year and rising to $55,000 in the 2nd.

Suite 6, 17-19 Miles Street, Mulgrave

Architecture firm Civikons Consulting leased the 61sqm office for 2 years at $223/sqm.

26 Swanston Street, Preston

The vacant 400sqm office and warehouse on an Industrial 3-zoned site with 4 parking spaces sold for $1.35 million.

Unit 3, 17-23 Walter Street, Moorabbin

An owner-occupier bought the 630sqm office and warehouse for $1.825 million.

8/145 Mornington-Tyabb Road, Mornington

The 450sqm warehouse on a 620sqm site within an industrial development sold for $1.505 million.

161 Perry Street, Fairfield

Construction industry supplier Grimleys, which supplies fasteners, anchoring systems, adhesives, tools and safety products to builders, leased the 1,690sqm warehouse on the corner of Chingford Street for 5 years at more than $220,000pa. The property was formerly occupied by Gazman.

252a Ballarat Road, Braybrook

Security wholesaler Cornick Pty Ltd leased the display yard at $63,000pa net.

Unit 40, 41-49 Norcal Road, Nunawading

A fresh food business leased the 153sqm warehouse with 3 parking spaces for 3 years at $28,000pa.

291 Maribyrnong Road, Ascot Vale
A land banking developer bought the 812sqm Commercial 1-zoned corner site for $3 million, on an initial net yield of 1.55%. it has a 600sqm building comprising 3 shopfronts and a part 2-storey retail/warehouse area.

335 Harvest Home Road, Epping

An investor paid $5.8 million on a 5.51% yield for the 765sqm showroom occupied by a Kingswim swimming facility, which has a brand new 15-year lease to YMCA.

16 out of 16 at Fitzroys’ Melbourne Retail Portfolio Auction
Well-located retail property remains a highly sought-after investment amid sharemarket and residential market volatility, with $29.14 million worth of property across Melbourne sold at Fitzroys’ Melbourne Retail Portfolio auction.

Fitzroys’ Mark Talbot, Tom Fisher and Chris Kombi marketed the portfolio, amassed by late businessman Harry Oviss, which went to auction at Leonda by the Yarra in Hawthorn.

The entire portfolio of 16 retail properties, set across 10 Melbourne suburbs and carefully collected over 70 years, sold on the one day at an average net yield of 2.99%.

Three properties in Alfrieda Street in St Albans sold for a combined $7.28 million on an average net yield of just 2.4%. They are all leased on 5+5 year deals to eateries Quang Vinh (sold for $2.51 million, at 1.99%), Xuan Xinh ($2.42 million, 2.56%) and Pho Kim Long ($2.35 million, 2.63%).

Five fully leased properties sold at sub-3% yields, including a shop in the heart of Hampton Street, Hampton and adjacent to the Woolworths leased to a giftwares and tobacco shop. Another 4 properties sold below 4%. They included a dominant corner property at the gateway of Koornang Road, Carnegie leased to three tenants Vault 143, Spilt Milk and Thompson & Thompson.

“Interest rate rises clearly haven’t perturbed the market, despite negative press,” Talbot said.

“Property continues to be in good demand, and we saw this in the global financial crisis also. Investors clearly consider well-located Melbourne retail properties with quality leases a secure investment amid sharemarket and residential market volatility

“The overall result is testament to the transparency and competitiveness of the auction process as well as the marketing campaign.

“Much of the interest came from buyers who knew their local area well. Investors, value-add players, land bankers and developers all showed interest. Many of the properties offered long-term leases in place to proven tenants while also enjoying the benefit of future value-add potential.”

“Investors ranged from entry-level and first-time market participants to self-managed super fund buyers and more seasoned investors, all looking for secure long-term investments amid sharemarket and residential market volatility.

“Well-located commercial property with long-term leases and sizeable annual increases like these are considered to present a more secure investment and safer place to put money in the current climate, even with further interest rate rises expected.”

Other properties to sell included shops in the heart of Swan Street, Richmond; High Street, Cranbourne; and Ranelagh Drive, Mount Eliza.

Kombi said, “The market has acknowledged the resilience shown by Melbourne’s shopping strips over the past two years. The COVID period has reinforced their role as a place for Melburnians to connect with their local communities. Our ‘local village’ became something more than a place to run errands and do the shopping - it was the place to get a coffee, meet friends for a walk, or to break up the day while we were all working from home,” Kombi said.

Other properties to sell included assets in the heart of Swan Street, Richmond; adjacent to the high-performing Woolworths in Hamptothe gateway to Koornang Road, Carnegie.

More Land Around Avalon Airport Primed for Development
Civil construction firm Universal Corporation has bought 141ha of farmland next Avalon Airport that could form part of a potential $4 billion precinct for manufacturing, transport, logistics, wholesale and airport-related businesses.

The 15 Avalon Road site, next to the Princes Freeway, is still zoned for farming and was bought for around $95 million.

The precinct on the west side of the airport was first mooted by MAB Corporation, which owns a 780ha neighbouring site at 255-275 Avalon Road following a deal with ASX-listed animal feed business Ridley Corporation.

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.