Weekly Wrap

Fitzroys Weekly Wrap - 7th June 2024

Posted on 07th June 2024

113 Lygon Street, Brunswick East
An investor bought the 150sqm building for $1.3 million, on a 4.5% yield. Tips and Toes occupies the property on a brand-new 5-year lease.

97-99 Koornang Road, Carnegie

A local buyer paid $4.075 million for the 350sqm building, which has an 8-year lease to May 2030 plus options to 2043 to grocer MVJ.

2 Langshaw Street, Altona North

ASX-listed Vicinity Centre sold off the 1,584sqm EG Fuel service station site adjoining its Altona Gate Shopping Centre for $3.12 million. The site has a ground lease expiring this year.

190 High Street, Belmont

The 1,196sqm Commercial 1-zoned corner site occupied by Magic Hand Car Wash sold for $2.925 million. It has a 5-year lease with no options returning $140,000pa.

Ground, 552 Lonsdale Street, Melbourne

An interstate investor bought the 124sqm CBD property occupied by Korean restaurant Yoon’s Kitchen for $2.08 million, on a 5.59% yield. Yoon’s Kitchen has a 10-year lease until 2032.

7/796 High Street, Kew East
The 545sqm office and warehouse unit with 5 allocated car parks sold for $2.35 million.

86 Maher Road, Laverton
The 5,155sqm office and warehouse on a 12,573sqm site sold for $10.75 million.

Factory 17, 54 Commercial Place, Keilor East

A local investor bought the corner office and warehouse unit for $1.025 million.

14 Fink Street, Preston

Progressive Panels leased the 520sqm warehouse in a 3+3-year deal at $90,000pa, or $173/sqm. It was previously owner-occupied by a textiles business.

695-697 Sydney Road, Brunswick
An investor/developer bought the vacant triple-fronted 800sqm Commercial 1-zoned site, which has a 732sqm office and warehouse.

Lots 2 & 3, 88 Myers Street, Geelong
The 2 medical suites within the St John of God Granada Medical Centre, totalling 183sqm, sold for $1.4 million on 6.49% yield. They are lease to Australian Clinical Labs and Kiddies Eye Care.

Lot 24, 88 Myers Street, Geelong

The 213sqm medical suite occupied by Lake Imaging, owned by ASX-listed Integral Diagnostics, sold for $1.325 million on a 5.97% yield. It has a 7-year lease to 2028 with a 5-year option, returning $79,0090pa plus GST.

Fitzroys Lands 3 Suburban Supermarket Sales
Investors continue to seek bricks-and-mortar assets leased to essential services tenants, with Fitzroys selling circa $15 million worth of supermarkets in just a few weeks.

Fitzroys’ Chris Kombi and Ervin Niyaz have just sold the strata-titled ALDI supermarket in Gladstone Park Shopping Centre on a 6% yield.

That comes as Chris James and Tom Fisher have sold the Albert Park Village home of independent supermarket Gum Tree Good Food, at 87-89 Dundas Place, for $4.9 million, on a high building rate of $14,000/sqm.

They have also just sold the Gum Tree Good Food premises at 422 New Street, Brighton on a 5.2% net yield, in an off-market deal.

Gum Tree has long 7-year leases over both supermarkets.

The newly negotiated deals bring Fitzroys’ tally of supermarket asset sales across a range of market segments in the past nine months to circa $83 million. Those include the $17.5 million sale of the brand-new Coles at 263 Normanby Road in the Fishermans Bend precinct, and the sale of Coles-anchored Torquay Village.

“Investors are seeking surety and so are turning to defensive bricks-and-mortar assets secured with leases to essential services tenants, which have proven their resilience through the turbulence of the past few years. Supermarket assets have retained their status as ‘recession-proof’ and are among the most sought-after in the market,” Kombi said.

“Supermarkets have been tightly held in recent years, with only a small number changing hands annually. They’ve continued to trade on healthy yields on the rare occasion they’ve come up for sale.”

Kombi added, “The buyers considered interest rates to have probably topped out and now is the time to be securing these properties.”

Located within Gladstone Park Shopping Centre, strategically positioned opposite a Woolworths supermarket and BWS and surrounded by over 100 national and local traders, the 1,604sqm ALDI property has a 10-year lease plus options to the global supermarket giant.

“This was a rare opportunity given its price point, as well as offering a strong return and future rental growth prospects, and secure lease to one of the world’s largest and most profitable supermarket chains,” Niyaz said.

He added that the ALDI supermarket has traded well given its location in a densely-populated residential and commercial catchment with further growth prospects. James said the buyers of the Gum Tree supermarkets liked Gum Tree’s status as a popular specialised independent grocer.

“The Gum Tree supermarkets have traded strongly given their locations within established and affluent catchments. Specialty supermarkets been trading well across Melbourne and investors have recognised their role as essential services within their neighbourhoods.”
James also noted that the ALDI and Gum Tree supermarkets are all strata-titled properties.

“Portfolio investors have historically shied away from strata properties, but in light of the changes to stamp duty with the introduction of the Commercial and Industrial Property Tax investors are now open to this segment of the market.

“Strata-titled properties present the chance to an investor to maximise the yield from their asset, offering less exposure to land tax. They also can also offer an easier management proposition as an owners corporation often oversees maintenance and upkeep.”

Local Private Investor Buys Coles Bentleigh Supermarket Building

A local private investor has acquired the Coles Bentleigh supermarket building for over $25 million.

The 2,331sqm building at 2-6 Bent Street is on a 3,388 sqm site opposite Bentleigh train station and returns $984,619 in rent per annum. As part of the lease, Coles pays land tax and maintenance costs.

Port Melbourne Distribution Facility Sells For $61m
The Dexus Wholesale Australian Property Fund has offloaded a Port Melbourne distribution facility for $61 million.

The 3.34-hectare landholding represents is improved by a 25,372sqm multi-tenanted facility totalling, with a 1.9-year weighted average lease expiry and an estimated fully leased net income of over $3.2 million.

Dexus acquired the property in 2015 for $36.2 million from the AMP Wholesale Australian Property Fund.

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.