Weekly Wrap

Fitzroys Weekly Wrap - 24th March 2023

Posted on 24th March 2023

103-105 Koornang Road, Carnegie
A local owner-occupier bought the 240sqm building formerly tenanted by NAB for $3.85 million. It is on a 460sqm site zoned Commercial 1.

17 Reynolds Road, Belmont

The City of Greater Geelong sold off the bowling alley and health centre property for around $5.5 million. The property comprises a 2,975sqm building with 175 car parks on a 1.5ha site and returns $195,000pa net, with leases of up to 20 years.

122-124 Lower Plenty Road, Rosanna

The vacant 224sqm building on a 364sqm corner sold for $1.888 million.

180 Camberwell Road, Hawthorn East

Japanese restaurant Okra signed a 7-year lease plus options over the 177sqm space, which is fitted with a commercial kitchen, at $385/sqm.

549 St Kilda Road, Melbourne

Abacus Bar & Kitchen is opening a 2nd café following its Chapel Street South Yarra location. It leased the 195sqm space for 5 years at $80,000pa.

84-88 Montague Street, South Melbourne
The 2-level 754sqm office and showroom building on a 460sqm Capital City-zoned corner site sold for $4.34 million. It is leased to September 2025 with no option, returning $105,000pa.

15 Marine Parade, Abbotsford
Not-for-profit organisation You Matter leased the 656sqm office and warehouse for 3 years at $110,000pa plus outgoings and GST.

21 Stanley Drive, Somerton

A local owner-occupier expanding their business bought the 449sqm office and warehouse for $1.275 million.

188 Derrimut Drive, Derrimut

A logistics company leased the 310sqm office and warehouse at $38,000pa net.

25 Newmarket Road, Werribee
Development Victoria sold off the 18,810sqm site to a local aged care developer for $6.5 million. The land is zoned General Residential 1 and is part of Development Victoria’s Riverwalk project.

86 Kooyong Road, Armadale
The medical practice building on a 410sqm site sold for $2.6 million. The tenant recently renewed their lease for 3 years, and the purchaser intends to develop the site in future.

Huge Investor Appetite for Supreme Investment Opportunity
There remains a strong appetite for quality investment opportunities in good locations across Melbourne.

In the latest sale, Fitzroys Mark Talbot and Tom Fisher sold 697 Centre Road, Bentleigh East, trading as global giant Pizza Hut, for $855,000 and on a tight 4.3% yield, at a hotly contested auction.

The strata-titled property has a 5+5-year lease ending in 18 months to long-standing tenant of over 20 years Pizza Hut.

Talbot said the sale price was $55,000 over the reserve and reflected a high building rate of $9,300/sqm.

“We had 4 registered bidders on the day with 2 fiercely fighting out the auction,” Talbot said.

“Despite the ongoing interest rate hikes, there’s clearly a strong appetite for well-located, well-leased investment opportunities across Melbourne,” Talbot said.

“Investors continue to find safety in bricks-and-mortar assets.”

The Pizza Hut property is situated amongst an abundance of national and local operators, including an IGA supermarket, Priceline, Boundary Hotel, Bakers Delight, BWS, Body Fit. KX Pilates, Jetts Fitness, Merchants Guild and more.

Talbot added that there is still strong demand for well-leased investment property.

“Many investors continue to turn to commercial properties to shore up their income stream amid volatility in the stock market,” he said.

“The high inflation period is expected to be short-lived from here and interest rate rises are likely to come down after a period of stabilisation during this year, making returns on properties acquired now all the more attractive.”

“Well-leased, well-located strata assets tick many boxes. Typically, they offer an easier management proposition, as an owners corporation oversees maintenance, and low land tax liabilities don’t cut into the return.”

Centre Road, Bentleigh’s Emergence into Lifestyle Destination Continues

Centre Road, Bentleigh is continuing its emergence into one of Melbourne’s best-performing shopping strips, with a string of new leasing deals by Fitzroys boosting its lifestyle offering and keeping its vacancy rate at a long-term low.

Fitzroys Tom Fisher has just negotiated 3 leases, extending the agency’s dominance in the strip. Headlining the deals is fast-expanding Korean eatery Gami Chicken & Beer, which had been looking to open a store on the strip and will be moving into 472 Centre Road on a 5-year deal at $70,000pa net.

Fisher negotiated another secure 5-year lease to a pizza operator a few doors over, at 482 Centre Road, at $59,000pa net, while he also leased 379 Centre Road to a financial services firm, for 3 years at $70,000pa net.

“Tenants have really taken note of the high foot traffic and the street’s lively nature,” he said.

“Centre Road, Bentleigh has always been popular among shoppers but it’s now home to a more dynamic offering, with a growing number of popular cafes, restaurants and bars including Little Tommy Tucker, Sonder Bar, Hunky Dory and Bentleigh Social.”

Fitzroys latest Walk The Strip report shows the proportion of food and beverage tenancies on Centre Road, Bentleigh jumped by 13.7% in 2022 to a long-term high of 37.6%, helping to drive down the vacancy rate to just 3.1% - among the lowest in Melbourne. This made it perhaps the best example of the trend detailed in the report that showed the average vacancy along Melbourne’s iconic shopping strips came down in line with an increase in hospitality operators taking up spaces.

Both Gami Chicken & Beer and the pizza operator have leased fitted-out spaces, which Walk The Strip shows has been a dominant theme in Melbourne’s shopping strips since the onset of COVID.

“Fitted-out spaces allow operators to open up quickly, without having to commit to fit-out costs which have become increasingly expensive. Suburban properties like these are in a sweet spot for size also, meaning operators don’t have to take up larger premises with excess space and can find a balance between dine-in and takeaway orders,” Fisher said.

Fisher said the evolution of Centre Road, Bentleigh into one of Melbourne’s top-performing retail strips is due to a number of different drivers.

“Centre Road has proved the power of supermarket anchors with 3 supermarkets underpinning its outperformance over the past few years,” he said. All of Coles, Woolworths and Aldi consistently bring pedestrian traffic to the strip.

“The State Government’s rail crossing removal initiative has also made huge impact on the strip, enhancing its already-high accessibility, with a large volume of on-street and Council car parking, Bentleigh train station and multiple bus routes,” Fisher said.

The strip is set for further evolution with Glen Eira Council implementing works for its Bentleigh Eat Street, which will see 2,400sqm of public space and side streets activated by cafes, restaurants, bars, outdoor seating, and supported by the extension of trading hours, and add depth to the linear retail strip.

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 2023 Fitzroys.