Weekly Wrap

Fitzroys Weekly Wrap - 5th August 2022

Posted on 05th August 2022

143-145 Koornang Road & 288 Neerim Road, Carnegie
The 240sqm building with 3 shops on a 254sqm corner site sold for $2.4 million, on a 3.29% net yield. Each of the tenants, Vault 143, Thompson & Thompson and Spilt Milk, have respective 5+5-year leases.

85 Main Street, Mornington

A local investor paid $2.8 million on a 3.6% yield for the 160sqm building on a 249sqm site. ASX-listed Bendigo and Adelaide Bank has a lease until 2024 that returns $101,341pa plus GST.

174-176 Bay Street, Brighton

An investor bought the 190sqm dual-tenanted building on a 207sqm site for $1.72 million. It is fully leased to long-standing tenant White Glove Mover as well as Australian Laser and Skin Clinic, returning a combined $79,094pa plus GST.

124-126 Fryers Street, Shepparton

The 786sqm dual-tenanted building on an 848sqm site sold for $3.15 million on a 5.08% yield. Fast food operator Schnitz has a 10-year lease to 2028 plus options to 2042, and government-funded agency Beyond Housing has a 10-year lease to 2029 plus options. The building recently underwent $1 million in tenant-funded upgrades.

137-139 Main Street, Croydon

The 160sqm building sold for $1.745 million on a 4.37% yield, with a renewed 12-year lease to June 2033 to longstanding café tenant Kofi Beans. It is on a 288sqm site with dual street frontages.

1/335 Harvest Home Road, Epping

An investor paid $1.455 million on a 4.99% yield for the shop, which is leased to a liquor store Liquor Stax on a new 10+10-year term.

240 Epping Road, Wollert

An investor bought the drive-through building for $1.15 million, at a 4.13% yield. Latte Road has a 5-year lease to 2025 plus an option.

759 Glen Huntly Road, Caulfield

An owner-occupier planning to open an Asian restaurant bought the 72sqm brick building for $610,000.

204 New Street, Brighton
The 190sqm building sold for $2.14 million. A majority of the income is from foreign superannuation fund Northland Group.

3/752 Blackburn Road, Clayton

The ground-floor 140sqm open-plan office sold with a monthly lease for $622,500.

Unit 402, 91-95 Murphy Street, Richmond

Growing fashion fabrics and textiles distribution business Texstar Textiles leased the 61sqm office suite with 1 car park for 2 years at just over $320/sqm net.

34 Gilbert Park Drive, Knoxfield
Edison Group acquired the 3,366sqm warehouse on a 5,800sqm site from Promandes for $9.658 million, on a 4.73% yield. ASX-listed AMA Group has a 5-year lease returning $457,537 plus outgoings and GST.

8-10 Dight Street, Collingwood

A local buyer paid $2.5 million for the 305sqm warehouse on a 299sqm site.

5/1853B Frankston-Flinders Road, Hastings

The 363sqm workshop on a 480sqm site leased to MyCar Tyre & Auto sold for $2.035 million on a 4.75% yield, with a brand new 10-year lease plus options that returns $96,602pa plus GST.

50 Orbis Drive, Ravenhall

The 736sqm 2-level office and warehouse sold for $1.77 million. It is occupied by a home builder and returns $68,181pa net.

12 Dendle Street, Grovedale

Investors bought the 470sqm office and warehouse for $1.51 million. It has a lease expiring in January 2024 with no option, returning $65,000pa net.

Unit 4/45-53 Duerdin Street, Notting Hill

The 445sqm building sold for $1.85 million at a 3.99%. It has a lease returning $73,887pa net that ends this year.

Lot 1 & 12 Ascot Gardens Drive, Bonshaw
A Sydney-based residential developer paid $15 million for the 7.92ha greenfield site on the southern outskirts of Ballarat.

Shop 1/4 Pacific Promenade, Pakenham

The 80sqm space operating as a Dorevitch Pathology sold for $679,000 at a 4.71% yield. ASX-listed Healius has a 5-year lease to 2026 with 2 further 5-year options, returning $32,000pa plus GST.

Melbourne Office Demand Growing
Demand for offices in Melbourne’s CBD continues to gather momentum, according to the Property Council of Australia’s latest figures.

The Melbourne CBD vacancy rate increased to 12.9%, however demand for space grew in the 6 months to July. The increase in vacancy was owed to the amount of new office stock that has come on line.

Fitzroys Director – Office Leasing, Phillip Cullity said tenants had had time to assess their workspace requirements and were now more active in the market and committing to deals.

“Enquiry has clearly grown in the Melbourne CBD in recent months with businesses now more confident in how they want to use their office space in the longer-term.”

“The sub-500sqm market overall has been particularly active, as businesses with smaller space requirements have proven to be more agile and more willing to make commitments to leases. However, we’re seeing larger tenants also growing their presence in the market and they’re expected to be more prominent in enquiry through the rest of 2022.”

Education tenants have also become more active in the CBD office market as international borders reopened and with the return of in-class learning across institutions and activity returning to the city.

Cullity said across the market there is a “flight to quality” taking place, which has prompted landlords to refurbish and upgrade their assets, as well as undertake speculative fit-outs to attract tenants.

“There is evidently plenty of demand for CBD office space to be captured by the market, and proactive landlords will be well-placed to take advantage of this,” he said.

Flinders Street Building Sells for $40m
Boutique property investor Collective Capital has acquired the 11-storey office building at 342-348 Flinders Street for around $40 million.

The 5,200sqm building is a block away from the new Town Hall station, part of the circa-$13 billion Metro Tunnel project. Formerly known as the China Southern Airlines Headquarters, it currently has vacancies and all tenants are on short to medium term leases. Capital Collective plans to begin upgrade works immediately.

Recently, Singapore-listed SLB Development picked up the vacant former Victoria University campus building at 225 King Street for $40 million.

$100m for Iconic Melbourne Pub Leaseholds
Private equity-backed Australian Venue Company has acquired the leaseholds to 8 trophy Melbourne hotels, including St Kilda’s The Espy, in a circa-$100 million deal with hospitality operator Sand Hill Road.

The venues also include Garden State Hotel on Flinders Lane in the CBD, Richmond Club Hotel, Bride Hotel and Holliava, also in Richmond, The Posty in Cremorne, Terminus Hotel in Abbotsford and Prahran Hotel.

Sand Hill Road had purchased the neglected Espy in 2017 and undertook a restoration of the famous live music and entertainment venue. It will retain the freehold title, while the other 7 venues have different freehold owners.

Another Supermarket Sells on a Sharp Yield
The strata-titled Woolworths in the old Glenferrie Market complex is the latest supermarket asset to sell on a sharp yield, changing hands for $12.85 million, at 3.3%.

The 1,827sqm supermarket is next to Glenferrie railway station and Swinburne University. The vendor, Diamen, bought the property in 2007 for $7 million from the centre’s developers.

Fitzroys recently sold the 3,744sqm Woolworths Eltham supermarket building for $35 million, which also reflected a 3.3% yield. Woolworths has a brand-new 5-year lease plus options through to 2050 over the 9,044sqm site.

Other supermarket assets to trade on sharp yields recently include a Woolworths in North Balwyn for $45.7 million on a 2.99% yield, a Coles Local on Glenferrie Road in Hawthorn for $24.5 million at 1.9%, and a Woolworths in Blackburn South 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.