Weekly Wrap

Fitzroys Weekly Wrap - 1st December 2023

Posted on 01st December 2023

690 Glenferrie Road, Hawthorn
The 2-level 260sqm building on 163sqm of land sold to an investor for $4.5 million, on a land rate of $27,600/sqm. It is occupied by eatery FooDao on a 7+5-year lease.

379 Centre Road, Bentleigh
An investor bought the 225sqm building on a 240sqm site for $1.61 million, on a 4.1% yield. Located metres from Bentleigh train station, the property has a lease with options until 2032.

1 Kings Road, Kings Park
The 7-Eleven-occupied fuel and convenience station sold for $2.625 million. 7-Eleven Australia has a 10-year net lease with options through to 2043 over the 1,100sqm corner site, which returns $173,868pa plus GST.

654 Glenferrie Road, Hawthorn
An investor bought the 138sqm shop on a 221sqm site for $2.3 million. Eckersley’s Art & Craft has a 3-year lease returning $109,272pa plus outgoings and GST.

359 Whitehorse Road, Balwyn
The 219sqm building on a 383sqm Commercial 1-zoned site sold for $2.3 million. Built in the 1930s for the English, Scottish & Australian Bank, the property is now occupied by Ms & Mr Kitchens, returning $90,460pa plus GST.

18 Heffernan Lane, Melbourne
The 3-level freehold in Chinatown was leased for $250,000pa. Currently 2 accessible levels totalling 570sqm are being utilised, with the new tenant planning to use the entire 770sqm building.

1-3 Coote Street, South Melbourne
A local owner-occupier paid $2.29 million for the property, which comprises a ground-floor office leased until February with a 1-year option at $35,000pa plus GST, and a 3-bedroom residence of 212sqm.

2, 11-19 Bank Place, Melbourne
A local high-net-worth investor paid $1.75 million for the 247sqm property, which is within the historic circa-1903 Bank House building.

35 Downing Street, Oakleigh
Property investor Heine Brothers acquired the Oakleigh home of A2B Australia in an $8 million sale and leaseback deal with the listed taxi company. A2B will occupy the 2,012sqm property on a 5,733sqm site for 2 years.

40 London Drive, Bayswater
The 1,330sqm office and warehouse on a 2,251sqm site sold for $2.93 million. Long-term tenant secure plastic card manufacturer Placard occupies the facility on a renewed 2+2+2-year deal returning $148,986pa net.

15/125 Rooks Road, Nunawading
The 238sqm office and warehouse with 4 allocated on-site car parks was leased at $49,950pa.

2 Pope Place, Greensborough
National childcare operator Bright Steps Early Learning leased the 2-storey childcare centre, which is part of the Greensborough Station and Poulter Reserve development and will have capacity for 92 children, at $395,000pa.

Torquay Village Sells, Surf Coast Proves Investment Credentials Again
Investors are continuing to seek out defensive bricks-and-mortar assets, with Coles-anchored neighbourhood shopping centre Torquay Village selling for an undisclosed price, as the Surf Coast again proves its investment credentials amid an ongoing surge in growth and popularity. Paul Burns of Fitzroys negotiated the off-market sale of Torquay Village, at the corner of Bristol Road and Payne Street, on behalf of IP Generation. The purchaser is a private Malaysian investor who has various property holdings in Australia.

Fully-leased, Torquay Village comprises a 4,056sqm full-line Coles supermarket - the largest in the main trade area - as well as 14 specialty tenants and one ATM for a total lettable area of 6,779sqm. The centre is on a significant 14,030sqm site with 260 car parks and 260 metres of street frontage, centrally located in the Torquay retail precinct.

It has a long weighted average lease expiry (WALE) of 7.6 years by income and 8.19 years by area.

“Amid the broader market slowdown and a highly publicised gap between expectations of sellers and vendors, neighbourhood shopping centres have continued to trade strongly and on healthy yields on the rare occasion that they’ve come up for sale. Investors are seeking surety and so turning to defensive bricks-and-mortar assets with essential services tenants that have proven their resilience through the turbulence of the past few years,” Burns said.

“The current higher interest rates clearly haven’t deterred investors from pursuing high- quality opportunities.”

Most of the specialty tenants at Torquay Village are non-discretionary retailers, he said.

“Some specialty tenants are currently paying turnover rent, and Coles are close to their turnover threshold so rental growth is imminent. This was an attraction to the purchaser.

“Good centre management has resulted in Torquay Village trading very well, and despite the challenging economic conditions, there are no vacancies and there’s been strong demand from businesses looking to move into any available specialty shops.

“Torquay Village has excellent trade prospects given its central location on the Surf Coast, which continues to benefit from sea changers and significant new residential developments in nearby locations such as Armstrong Creek.”

“IP Generation have added significant value to Torquay Village during their ownership, delivering a high-quality tenancy mix to complement a strongly performing Coles. It is an outstanding long-term passive investment,” Burns said.

The Surf Coast is the seventh-fastest growing LGA in Australia, according to the 2021 Census. The recently adopted Torquay-Jan Juc Retail and Employment Land Strategy forecasts the current circa 22,000 population of the Torquay-Jan Juc area to surge by a further 12,000-plus residents by 2036.

The deal marks the second time in a year that IP Generation has ridden the wave of growth on the Surf Coast and sold a Torquay investment. Last year, also through Paul Burns in an off-market deal, IP Generation sold a mixed-use, multi-tenanted building in Baines Crescent for $40 million.

“This transformative period for the Surf Coast is continuing to have a profound effect on its commercial property market,” Burns said.

He said the 50% stamp duty discount that applies to regional Victorian commercial property purchases was an additional attraction to the purchaser of Torquay Village and Baines Crescent. Lower site values, thus land tax is also an attraction of regional property.

HomeCo Daily Needs REIT Offloads Box Hill Centre
ASX-listed convenience and large-format retail asset landlord HomeCo Daily Needs REIT has sold its HomeCo Box Hill Centre for $67.5 million to a private Melbourne investor, on an initial yield of 5.5%.

The HomeCo Box Hill centre has 13,903sqm of floor space and is anchored by Chemist Warehouse, BCF, Petbarn and Decathlon. It sits on 3.96ha of land.

The centre sold with a WALE of 6.5 years.

HomeCo Daily Needs REIT earlier this year sold its large-format retail centre and adjoining land in Epping for $70.25 million to Forza Capital and Enclave Living/Jayland. Tenants at Epping Hub include Officeworks, Chemist Warehouse, Cash Converters, Harvey Norman and Supercheap Auto.

Other Melbourne large-format retail sales in 2023 have included ASX-listed Vicinity Centres divesting Broadmeadows Homemaker Centre for over $20 million. The 5,631sqm centre is on a 3.4ha site.

Medical Centre Property Sells for $45m
A local private family has acquired the 5,000sqm strata-titled property home to the Manningham Medical Centre for $45 million.

The 6-storey centre at 200 High Street in Templestowe Lower traded on a passing yield of 6.4%. It currently returns a gross passing income of $2.9 million from a mix of tenancies including a general practice, Nexus Day Hospital, Sonic Healthcare and Capital Radiology.

Recent medical centre property sales in Melbourne include Epping Private Hospital and Medical Centre selling to Kordamentha’s funds management arm for $76 million, divested by a syndicate headed by Canada’s Northwest Healthcare Properties.

Dexus Sells $25.3m of Industrial Land
ASX-listed Dexus Property Group has sold more than 3ha of land within a Truganina industrial state for $25.3 million.

The land at 20 Distribution Drive was sold across 2 lots, both to owner-occupiers. Building materials company Mapei bought 19,940sqm, and aluminium manufacturer Protector Aluminum acquired a 10,230sqm lot.

Fund Manager Buys State Government-Tenanted Building
Property funds manager MPG Funds Management has paid $14.3 million to acquire a Sunshine building leased to the Victoria Government.

The recently-constructed strata building has 2,127sqm over 2 levels occupied by the Government’s The Orange Door on an 8-year term. It sold on a 6.25% yield.

    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.