Weekly Wrap

Fitzroys Weekly Wrap - 8th September 2023

Posted on 08th September 2023

328-334 Clarendon Street, South Melbourne
Terraplex and PodCo sold the last of their Emerald Hill Terraces, for $7.33 million. The 744sqm shop, on the corner of Bank Street, is partly leased to hair salon Rokk Ebony and returns $228,168pa in rent. The new owner will occupy the vacant bar.

180-182 Ryrie Street, Geelong

An owner-occupier bought the vacant 800sqm 2-storey brick building in the Geelong CBD for $2.81 million.

R3, 193-223 Canterbury Road, Bayswater North

The 701sqm retail/showroom/warehouse with an optional mezzanine of 190sqm was leased at $120,000pa.

400 High Street, Northcote

A land banker who purchased the neighbouring property at 396-398 High Street bought the 200sqm number 400 for nearly $1.36 million.

16 Wakefield Street. Hawthorn
A local owner-occupier paid $3.75 million for the vacant 2-level, 336sqm office building on a 360sqm site.

458 Swanston Street, Carlton

A design agency bought the 135sqm half of level 6 for $1.03 million.

182 Victoria Parade, East Melbourne

The 108sqm level 1 office sold for $535,000.

604/566 St Kilda Road, Melbourne

The 50sqm office sold for $180,000.

73 Star Crescent, Hallam
An owner-occupier bought 3,965sqm site for $4.1 million. It has a 360sqm warehouse.

Unit 2, 14 Castro Way, Derrimut

A local investor bought the 1,530sqm office and warehouse on a 2,810sqm site for $3.7 million.

58 Henderson Road, Clayton

An investor bought the 530sqm factory building on a 691sqm site for $1.465 million, on a 3.5% yield. It is leased to FRAS Longwall Pty Ltd on a 5-year lease from January 2022, returning $51,500pa net.

24-28 Cremorne Street, Cremorne
A land-banking investor paid about $13 million for the 934sqm site, which comprises a motorbike dealership and F45 gymnasium.

The Changing Face of Our Shopping Strips

The proportion of strips earmarked for development has remained elevated since 2020, and was at 2.2% over the past 12 months, according to Fitzroys’ latest Walk the Strip report, which highlighted the changing face of our shopping strips.

The proportion of development along two-thirds of all of Melbourne’s strips remains above the long-term average and is driving the transformation of retail strips turning into mixed-use lifestyle precincts.

“The pandemic and its effects on our consumption patterns coincided with the increase in development across Melbourne’s shopping strips, which our data shows has been elevated since 2020,” said Fitzroys Division Director, James Lockwood.

“We expect this to remain elevated. While a number of people made the treechange and seachange move during COVID, Melbourne’s population is again on the growth path and we’re again seeing people wanting to live, work and play in and around Melbourne’s retail and lifestyle strips.

    “As well as bringing new retail offerings to the strip, new developments are bringing more residents and office workers to the immediacy of the strip, boosting the immediate catchment and supporting trade throughout all hours of the day – especially when so many are working from home.”

    The largest and perhaps most high-profile shopping strip development is the $1.5 billion redevelopment of the Jam Factory on Chapel Street, South Yarra by Newmark Capital, Gurner and Qualitas. The project will deliver 18,500sqm of new retail space, 20,000sqm of offices, 400 apartments, and a 5-star 200-room hotel, as well as an upgrade to the existing cinema complex.

    “It’s not only the end result – it’s also the anticipation these developments bring,” Lockwood said. “We’ve seen seen tenants already jostling to get into the strip ahead of the development taking off and Chapel Street, South Yarra’s vacancy has come down to a long- term low of 7.9%.”

    High Street, Armadale is a leading example of development enhancing an already-strong performer. Vacancy along the strip has fallen to 2.3% – among the absolute lowest of Melbourne’s shopping strips – which has coincided with new developments bringing quality retailers to the strip and a high development pipeline proportion of 3.2%.

    Five current developments on the strip will bring around 115 new apartments to the immediacy of the strip, boosting its prized affluent and established catchment and further supporting trade, Lockwood said.

    These are in addition to the recently completed Alara project at 953-967 High Street, which incorporates the circa-1910 State Savings Bank building, and which has transformed this part of the strip. Not only has it brought 19 apartments to the section but created a new food hub – now home to famous Sydney butcher Victor Churchill, as well as popular bakery Ned’s Bake and fast-expanding Japanese salad purveyor Fishbowl.

    Bookending the strip, Moda is bringing 26 apartments to 835 High Street, which has also delivered world-famous Lune Croissanterie and popular boutique grocers The Leaf Store to the strip.

    “High Street, Armadale is now a legitimate contender for the title of Melbourne’s best- performing shopping strip. A decent part of that has to do with the added activity developments are bringing,” Lockwood said.

    He said developments are attracting high-quality tenants for a number of reasons.

    “Developers are more accustomed to working with tenants and are now more willing to negotiate on deals. Developers realise the benefit of having a quality tenant on the ground floor in keeping with the prestige of the profile with what’s above it.

    “People know about the High Street, Armadale developments because of Victor Churchill, The Leaf Store, and Lune.”

    Other notable developments across Melbourne’s shopping strips include Pitard Group’s Dexus-backed EVA on Glen Huntly Road, Elsternwick, which will bring 101 apartments and has delivered brand-new retail space that includes a Guzman Y Gomez and CorePlus yoga and Pilates studio. Meanwhile, on Puckle Street, Penny Lane has attracted more tenants to the south east part of the strip, coincidentally, also introducing Guzman Y Gomez, with a Palace Cinemas soon to open, while several developments in the heart of Hampton Street that will be completed in the coming two years are a big reason why the strip has seen vacancies crunched to just 1.8%.

    Toorak Village, which has an enviable seat within one of Melbourne’s most blue-ribbon catchments, is experiencing a transformation with two major developments underway that are spurred by demand for inner-city private family offices. Vicland’s eight-storey $250 million St Germain development, which has just introduced a new Coles Local to the strip and will also deliver a Cecconi’s restaurant, while Orchard Piper has been given the green light for a residential, retail and office project on the corner of Mathoura Road. The catchment will be further boosted by the nearby $400 million luxury apartment project on the Mercedez-Benz dealership site, also by Orchard Piper.

    The Salter Brothers’ Candela Ivanhoe will bring 62 apartments to the edge of the Upper Heidelberg Road retail strip, while Manors Gate’s Hawthorn Club has brought 68 apartments and ground-floor retail to the south end of Glenferrie Road.

    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.