The renowned Paris end of Melbourne’s CBD continues to draw investors from Australia and offshore, with the premises of a popular café selling under the hammer at a remarkable building rate of $57,000 per sqm.
Multiple bidders competed for the asset at the lunchtime auction, following a campaign that generated more than 95 enquiries from local interests and abroad.
A local investor put forward the winning bid of $2.164 million, reflecting a tight 4.2% yield.
The 38sqm property has high ceilings and a character shopfront is leased to highly regarded café Little Temperance on a secure 5+5-year lease. It is located at the base of Shocko House, a character-rich, four-storey building that was converted in 1998 to include three ground-floor retail shops with 16 residential apartments.
“Melbourne’s world-renowned cosmopolitan personality is made up of more than 200 laneways with an eclectic offering of cafés, food and beverage operators and boutique retailers,” Yeh said.
“Local and offshore investors displayed keen interest in big numbers to what represents an iconic Melbourne CBD retail investment.”
Yeh said hospitality operators often commit to longer lease terms, looking to establish a customer base and make the most of capital put towards fit-outs and operations.
“These elements can be a point of difference among Melbourne retail investments, particularly for those securely leased to highly regarded operators.”
Shum said investors recognised the rare opportunity to purchase a retail asset in a highly sought after CBD location with an enormous catchment area of office workers, shoppers, tourists and residents.
“Melbourne’s Paris end consistently attracts quality tenants, and is known for its roll call of high-end exclusive boutiques and international luxury retailers, which is beginning to spill over to the surrounding areas.
“Vacancies consistently remain close to 0%, and huge numbers of retailers pursue space in the prized precinct, accompanied by quality hospitality, restaurant and food and beverage operators.”
Yeh said the property is strategically positioned to benefit from ongoing residential and commercial development in the CBD, including the $1.5 billion 80 Collins Street, which will bring a new 40-storey office tower and 255-room hotel, as well as high-end eateries, and Dexus’s future office project at 52-60 Collins Street.
Given its positioning in the Paris end of the CBD, the property is surrounded by some of Melbourne’s most notable precincts including Swanston Street retail thoroughfare, Bourke Street Mall and Chinatown providing a diverse range of commercial, hospitality, retail, accommodation and public transport amenity.
The retail core surrounding the eastern end of Collins Street has been known colloquially as the Paris end since the 1950s, due to its numerous heritage buildings, old street trees, high-end shopping boutiques, and as the location for the first sidewalk cafes in the city.