Melbourne’s prime shopping strip investment market opened 2024 with a strong result, with the Lygon Street newsagency in the heart of the famous precinct going to auction selling on a tight 4% yield after land tax.
Fitzroys’ Mark Talbot and Shane Mills sold the two-level retail and office building at 325 Lygon Street, Carlton for $1.78 million on behalf of the Saffar and Durlacher families.
The purchaser is an existing owner of property in the street.
The 325 Lygon Street property is leased to longstanding tenant Carlton Newsagency, which has been at the property for around 20 years. Rental return is $77,712 per annum plus outgoings and GST, with the current seven-year lease ending 31 January 2025 with two further terms of five years each.
“The location spoke for itself - this is positioned in the absolute heart of one of Melbourne’s most famous shopping and dining strips,” Talbot said.
Talbot said the property is in the absolute prime of Lygon Street, between Faraday and Elgin Streets, opposite Lygon Court - home to Cinema Nova, Brunetti Classico and Woolworths - and amongst the and the strip’s famous cafés, restaurants, bars, retailers and entertainment venues including Tiamo, Heartattack and Vine, Milk the Cow, Grill’d, DOC Pizzeria, Crinitti, King and Godfrey, Seed, Mecca, Sportsgirl, Country Road, Readings, to name a few.
“While there is strong potential for significant rental growth, the buyer was confident in purchasing at a 4% yield even with the chance that the property may become vacant in January,” Talbot said.
“This is an incredibly tightly held part of Melbourne. Lygon Street is arguably Australia’s most famous dining strip and has come back from COVID in a big way, and the there is evidently confidence in the market about its investment credentials and trade prospects.”
Vacancies on Melbourne’s most famous dining strip are at their lowest in years as Melburnians again embraced dining and eating out, tourists returned in bigger numbers, and students came back to university. According to Fitzroys’ most recent Walk the Strip report, vacancies on Lygon Street have come down from 20.0% in the depths of COVID to now sit at 6.0%.
“The return of local and international students to Melbourne’s education precinct close by has also underpinned the return of trade along Lygon Street, and the rapid transformation of Carlton to accommodate and encourage student and residential apartment developments will further enhance its viability.”
Lygon Steet, Carlton is close to major education and health providers including University of Melbourne, RMIT, Royal Melbourne Hospital and St Vincent’s Hospital.
Talbot said that importantly, Lygon Street is set to become even more accessible in the near future. Excellent tram and bus connections are currently available, and the incoming Parkville Station, part of the Melbourne Metro Tunnel project, is set to open in 2025. There are also exceptional public car parking options close by including the Elgin Street Public Car Park providing over 200 car spaces.