Weekly Wrap

Fitzroys Weekly Wrap - 4th August 2023

Posted on 04th August 2023

35 Church Street, Brighton
A local investor bought the 288sqm site occupied by a NAB branch for $7.15 million, on a 3.5% yield and land rate of $24,826/sqm.

8 Station Street, Pakenham

An investor bought the 492sqm Repco-leased showroom on a 501sqm site for $2.4 million on a 4.36% yield. Repco’s lease runs to 2026 and has no further options.

Shop B1/223 Bridge Road, Cobblebank

The 51sqm shop occupied by laundromat Blue Hippo sold to a local investor for $741,000, on a 4.7% yield. Blue Hippo has a new 10-year lease plus options to 2043 returning $34,986pa plus GST.

88 Grange Road, Alphington

The vacant 256sqm single-level shop and dwelling property with a rear garage sold for $750,000.

530 Little Collins Street, Melbourne

A financial services business looking to move from Brighton bought Suites 1506 and 1507 on level 15 of the Exchange Tower, totalling 124sqm, for $575,000.

21/2-14 Station Place, Werribee

The 70sqm office suite sold for $280,000. It is leased to Social Structures Allied Health and returns $15,000pa plus outgoings.

47 Burns Road, Altona
An owner-occupier bought the 2,200sqm building on a 4,666sqm site for $5.95 million plus GST.

10 Gifford Avenue, Ferntree Gully

The 1,028sqm site, with a 301sqm building that has been used as an automotive repair shop, sold for $1.2 million.

Evolution Road, Truganina

Furniture and homewares retailer Provincial Home Living leased the 22,320sqm office and warehouse facility developed by ASX-listed Goodman Group, and which adjoins the new 115,000sqm Metcash distribution facility. Rents in the area range from $105 to $125/sqm net.

34 Burgess Street, Brooklyn

Robots maker Automated Solution will be expanding to its 4th site after it leased the 2-level, 770sqm office and warehouse for $104,000pa.

45-47 Embankment Grove, Chelsea
The 1,832sqm site sold for $3.2 million with a permit for a 122-place childcare centre.

37 Macleod Street, Bairnsdale

The 808sqm site, which has a medical centre building with 2 consulting rooms that can be converted into 4 rooms, sold for $470,000.

Walpole Hill - A Land-Rich Corner Investment in Kew Junction
An incredible fully-leased investment and landbank opportunity on 1,570sqm of prized Kew land has come to the market.

Fitzroys’ David Bourke, Chris James and Ben Liu are marketing Walpole Hill, at 4-14 Walpole Street in the Kew Junction precinct, via Expressions of Interest closing Wednesday, 30th August at 2pm.

It marks the first time in 30 years the property has been available for sale.

Expectations are of circa $10 million for the property, which has 12 individual titles to be offered in one line.

The property comprises a dominant single-level building of 1,296sqm with 10 fully occupied shops and a rooftop car park accessed off Walton Street providing 46 spaces. It currently returns $422,700pa with excellent rental growth potential. Among the range of retail tenants are Jade Kew Restaurant, Buoy Pizza, Beejans Bakery Café, LivFit Physio Kew and Skin & Brows, with leases ranging from 3 to 5 years plus options.

Zoned Commercial 1, the property is on 1,570sqm of invaluable corner land in the Kew Junction precinct, with 47.74m of frontage to Walpole and 33.15m fronting Walton Street. It is opposite a strong-performing Woolworths supermarket and metres from the corner of High Street.

“This is an ultra-rare opportunity to secure a landmark property in a blue-ribbon suburb with excellent landbanking attributes, with an established cash flow and rental upside, and considerable future redevelopment potential,” Bourke said.

Its location within the Kew Junction Activity Centre and Design and Development Overlay 14 DDO14 allows for a building height of up to 18m (STPA) and uses including retail, residential, commercial and mixed-use.

“Kew is widely recognised as one of Melbourne’s blue-ribbon suburbs, with an affluent and established catchment and high median house price that supports strong trade for retailers and operators. There’s also been significant medium-density residential development undertaken in the area, catering for downsizers as well as attracting a new generation of young professionals and families to its hospitality and lifestyle offering, particularly at a time of flexible working arrangements,” Bourke said.

“We’re again seeing more people gravitate to well-connected inner-city locations with high- quality hospitality and lifestyle amenity to live, work, shop and play. In turn, we’re also seeing a growing pull for businesses to establish offices in Melbourne’s inner east.”

James said Kew is serviced by all major trading banks, major supermarkets including Woolworths and local favourite Leo’s Fine Food & Wine, together with a host of recognised businesses including Chemist Warehouse, Flight Centre, Woodfrog Bakery, Endota Spa, Toscano’s and Bob Stewart, plus a wonderful food and beverage offering.

Major commercial offices already located in the area include tenants such as Roche, Hanes Brands, Bank First, Murdoch Partners Accountants, Henderson and Ball Solicitors.

The area is well-serviced by public transport, with Route 48 and 109 trams and multiple bus routes providing links to the CBD and wider metropolitan Melbourne, while there are several main arterial roads nearby including the Eastern Freeway to the north and CityLink to the south.

Liu said Kew is supported by strong demographic fundamentals, with a median house price of $2.81 million and median unit price of $802,944, while its population is forecast to grow by almost 20% by 2041.

He added that many of Melbourne’s leading private schools are located nearby, including Trinity Grammar, Ruyton Girls Grammer, Carey Grammer, Methodists Ladies College, Sacred Heart Primary School, Genazzano and Xavier College, and will continue to attract residents to the suburb.

Fitzroys recently sold the commanding hospitality building at 26-28 Cotham Road, Kew - formerly home to Hellenic Republic, operated by high-profile chef George Calombaris and his hospitality group Made Establishment - following an Expressions of Interest campaign that generated more than 70 enquiries.

The $5,006,666 sale price reflected a sharp 3.1% net yield. The immaculately-refurbished 635sqm 2-storey building has a 6+6+6-year lease to chefs Ayhan Erkoc and Federico Perez Lopez for their Cotham Dining restaurant and Nazar Wine Bar, both operating under the 1 lease.

Fortis Expands Cremorne Office Project
Fortis, the development arm of Pallas Group, is expanding its Dover Street, Cremorne office project after buying adjoining land for $10.25 million.

Its 9,324 sqm project at 65-81 Dover Street has been 90% pre-ahead of completion, with signees including global athletics wear giant Adidas. Fortis has now purchased the adjoining site at 85 Dover Street, which will enable another 3,500sqm of space to be added to the project.

Local Owner-Occupiers Buy Toorak Village Office Suites
Local owner-occupiers have bought 2 office suites within a Toorak Village development for more than $10 million combined.

The offices, which sold for over $17,000/sqm, are within Orchard Piper’s project on the corner of Toorak and Mathoura roads.

Orchard Piper is developing 3 levels of offices and 10 apartments on the 1,415 site, which it acquired 2 years ago for around $20 million.

Melbourne CBD Vacancies Lift to 15%
Melbourne’s CBD office vacancies lifted 90 basis points to 15% in the 6 months to July, according to the latest data from the Property Council of Australia.

Fitzroys Director Phillip Cullity said the movement had been partly impacted by an addition of new office supply.

He said tenant enquiry levels continue to be driven by smaller-sized and sub-800sqm tenants looking to capitalise on attractive leasing terms on offer.

“Businesses have been exploring real estate requirements post-COVID and have a clearer understanding of how much space is required and how they want to use the space. They’re moving forward with decisions more confidently.”

Fitted suites continue to be popular, he said, particularly among the more agile sub-500sqm and sub-800sqm markets.

“You can see, feel, touch and plan for occupying the office more easily with a spec suite. Tenants can also avoid the higher costs and the uncertainty of timing of fit-outs, and the overall hassle of having to manage an office relocation and build at the same time.”

Cullity said that employers are continuing to encourage staff back into the workplace within better-quality office buildings, and landlords are responding by upgrading their assets.

“The flight-to-quality is evident and landlords who are upgrading their assets continue to be rewarded.”

He added that while the hybrid working model is clearly here to stay, there is also evidence that the CBD is a preferred and popular place of work and play.

“Businesses and workers want to be in easily accessible locations with quality lifestyle and hospitality amenity, and the CBD provides a unique offering,” he said.

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.