Multiple bidders have competed for a strata-titled asset leased to an established hair salon, as investors continue seeking retail properties across Melbourne with strong fundamentals.
Chris Kombi and Chris James of Fitzroys sold Shops 19-20, 190 Jells Road in Wheelers Hill for $2.4 million under the hammer, at a tight 5.2% yield, on behalf of a local family who owned the asset for almost 30 years.
Kombi said the fierce competition between five investors at auction pushed the sale price well beyond reserve, while the building rate of $11,428 per sqm was remarkably high for a strata-titled retail property in the area.
A local investor purchased the property for their self-manager super fund.
The 210sqm fully self-contained premises is securely leased to Rokk Ebony Properties Pty Ltd on a 10+5+5-year deal with a solid return of $125,200 per annum.
The triple-fronted property is positioned at the front of Wheelers Hill Shopping Centre, with 38 metres of corner frontage to the car park and Jells Road, plus an additional 9-metre frontage inside the shopping centre.
The Centre includes over 500 car parking spaces.
Kombi said enquiry came from astute investors looking to add a high-quality suburban retail asset to their portfolio, to those looking for a self-managed super fund investment.
“Prospective buyers were attracted to the property’s secure lease to a successful tenant, strong passing income with fixed annual rental increases and low land tax liability.
“It is the perfect set-and-forget, low maintenance property investment most retirees are looking for.”
The hair salon trading as Fratelle has operated within Wheelers Hill Shopping Centre for over 26 years.
“Service retailers are playing a more prominent part in Melbourne’s suburban shopping centres and strips, and it remains difficult for the online world to replicate their offering,” Kombi said.
Wheelers Hill Shopping Centre comprises 40 retail operators and is anchored by Woolworths Supermarket, with other tenants including Bakers Delight, National Pharmacy, BWS, Bottle-O, Nando’s, Domino’s, Tatts and Australia Post.
The site also has a multi-storey corporate tower incorporating numerous commercial tenants, a frontage of approximately 200 metres to Jells Road, within the rapidly evolving, high-growth eastern corridor.
James said investors are seeking strong income-producing, securely-leased assets in locations with healthy growth prospects following recent cuts to the official interest rate.
This sale follows another strata titled retail property Fitzroys sold at auction at 2-6 Copernicus Crescent, Bundoora. A self-managed super fund investor paid $2.6 million, at a 5.5% yield.