Blue-chip Shopping Strips Continue To Deliver Hot Results Through Summer

Posted on 02nd February 2024

High-profile, blue-chip Melbourne shopping strip assets continue to deliver hot results through the summer.

The latest major deal is Fitzroys’ $5.15 million sale of 91-93 Toorak Road, South Yarra, on a very sharp passing net yield of 1.8%.

Fitzroys’ Lewis Waddell, David Bourke and Ben Liu sold the property on behalf of a local family. The purchaser is a private investor.

The property comprises a 415sqm building on a dual-fronted site with two separate tenancies - a La Porchetta restaurant and an optometrist - that offer a diverse income stream and strong rental growth and reversion.

Waddell said the buyer saw the underlying land value and flexibility in holding nearly 600sqm of freehold land in the heart of Toorak Road, South Yarra.

“This was a rare opportunity to pick up this much land with two street frontages with passing income in this section of Toorak Road,” he said.

Fitzroys has sold more than $16 million worth of prime shopping strip retail assets on Toorak Road in a three-month period. The tally includes the sale of 109-111 Toorak Road for $6.23 million, on a 3.2% passing yield; 107 Toorak Road on a 2.87% yield, and the 2023 benchmark sale of 416 Toorak Road, Toorak, at an incredibly low 1.8% net yield - likely the lowest paid for a fully-leased, pure investment play in Melbourne’s shopping strips in 2023.

“We continue to see investors put their faith in income-producing bricks-and-mortar assets at a time of share market and residential market volatility,” Waddell said.

“We have yet more evidence that higher interest rates clearly aren’t deterring investors from pursuing high-quality opportunities. Blue-chip locations with strong prospects continue to stand up despite the negative sentiment out there.

“Prime assets in Melbourne’s shopping strips offer excellent investment credentials. They’re experiencing a real period of renewal at the moment, with vacancies at a long-term low as Melburnians spend more time than ever at their local villages, supporting trade, while developments on and around the strips are underpinning future trade prospects,” Waddell said.

The 91-93 Toorak Road property is located just 250 metres from bustling South Yarra train station, and is surrounded by many key developments that will make this part of Toorak Road yet more dynamic, Bourke said.

He said these include the ongoing development at the neighbouring high-density Forrest Hill precinct, as well as Oreana’s $250 million redevelopment of South Yarra Square, V-Leader’s $90 million Hotel Claremont project and the $1.5 billion overhaul of the Jam Factory.

Liu said locations with surrounding activity and higher density development being propelled by Council are especially still performing well given the future growth prospects. According to Fitzroys latest Walk the Strip report, Toorak Road, South Yarra vacancies have nearly halved since 2021, from 10.1% down to 5.6% in 2023.