Weekly Wrap

Fitzroys Weekly Wrap - 10th April 2020

Posted on 10th April 2020

000 Retail 05

23 Robertson Street, Gisborne
A private investor bought the 1,498sqm corner service station site for around $6.5 million at a circa 5.5% yield. Puma has a 15+5+5+5+5-year lease.

246 Epping Road, Wollert
An offshore investor bought the Shell service station and Coles Express site for $4.65 million at a 6.32% yield.

12/110 Ashleigh Avenue, Frankston
An investor bought the 252sqm Liquorland store for $1.9 million at a 5.23% yield. The shop has a 5-year lease to November 2023, with options to 2038, and is integrated into a Coles supermarket.

237A Whitehorse Road, Balwyn
A local owner occupier paid $1.39 million for the vacant 165sqm 2-level shop and dwelling, which is on a 241sqm site zoned Commercial 1.

88 Maling Road, Canterbury
The 224sqm shop and dwelling sold for around $1.3 million at a 4% yield. The ground floor retail space is leased to Reflections Jewellery on a new 5-year lease with options.

1/51 Wadham Parade, Mount Waverley
A yoga studio leased the 105qm ground floor space at $32,500pa on a 5-year term.

560 Swan Street, Richmond
Hi5 Scooters, which rents bikes to food delivery services such as Uber Eats, leased the 152sqm showroom at $37,800pa.

Unit 1, 294 Ballarat Road, Braybrook
The 500sqm showroom was leased for 5 years at $67,500pa to a tenant expanding their western suburbs presence.

000 Offices 05

49 Cardigan Place, Albert Park
The Victorian terrace sold for $1.725 million to an owner occupier looking to relocate from their nearby office. Zoned Commercial 1, the 180sqm building has been utilised as an office and comprises five principal rooms and has rear access from Brooke Street. The sale price reflected a land rate of circa $12,000/sqm.

343 Little Collins Street, Melbourne
Bansal Immigration is expanding within Equitable House, buying the 40sqm Suite 706 for $250,000 plus GST. The agency owns a couple of office suites in the building, including neighbouring Suite 705. It offers education and advice for students, skilled migrants and other visa applicants.

620 High Street, Kew East
Kruger ANZ signed a 5-year lease at around $450/sqm for the fitted 345sqm ground floor space.

506/12-14 Claremont Street, South Yarra
Southlink Projects signed a 2 years and 7 months lease with options for the 121sqm office at $450/sqm.

10 Dimboola Road, Broadmeadows
The Federal Government leased 225sqm on level 2 within the recently redeveloped Broadmeadows Town Hall building for 3 years.

91-93 Railway Road, Blackburn
The Salvation Army sublet 246 ground floor space within their state headquarters to Perry Weston Lawyers.

000Industrial 05

21C Edinburgh Street, Oakleigh South
The 1,412sqm warehouse on a 1,513sqm site sold for $1.985 million with a short-term lease to Peter Fountas from Virtus Property Group.

9 Capital Drive, Dandenong South
An expanding Sydney-based fine meats business bought the 1,260sqm facility fitted with a freezer and cool room for $1.6 million.

63 Boundary Road, North Melbourne
The vacant 425sqm office and warehouse building has 4 on-site car parks and sold for more than $1.5 million.

Unit 6, 6 Bromham Place, Richmond
The 140sqm office and warehouse sold for $840,000 with a 3-year lease returning $50,000pa.

3/30 Prohasky Street, Port Melbourne
Fibre optic network firm Optical Solutions Australia signed a 5+5-year lease over the 922sqm office, showroom and warehouse building at $170,000pa.

000 Development 05

297-397 Roslyn Road, Highton
ASX-listed company Japara Healthcare sold the vacant 8,244sqm site in south-west Geelong to Multicultural Aged Care Services Geelong, Inc for $3.6 million. Zoned General Residential 2, it has approval for a 122-bed aged care facility.

1610 Malvern Road, Glen Iris
A private developer paid $3.1 million for the 1,120sqm site, which is zoned General Residential and has a permit for a development with 6 apartments and 2 townhouses.

000 Specialised 05

4-10 Jamieson Street, Cheltenham
MP Orthodontics is moving to a 315sqm space close to its current premises, signing an 8-year lease at $340/sqm.

000 Talking Points 05

$100m of Capital Pursuing Melbourne Commercial Property
Despite an uncertain environment, $100 million of capital is actively pursuing well-located, income-producing Melbourne commercial property assets, demonstrated by the Fitzroys sales of a blue-chip investment on Burke Road, Camberwell for a remarkable $12.06 million, and a high-profile Mulgrave office building for $6.6 million.

Chris James and David Bourke of Fitzroys sold the long-term home of the Commonwealth Bank at 735-737 Burke Road (corner Commerce Lane) on behalf of private vendors that had held the property for 23 years. The purchaser is a private local investor.

Located in the prime of the famous shopping strip and just metres from bustling Camberwell Junction, the dominant 844sqm 2-level building is on a corner site of 490sqm and has a large 15.7-metre frontage to Burke Road.

The sale price reflected a very sharp 3.5% yield. Commonwealth Bank has a new, long 7+5+5-year lease, returning $425,000pa net.

James said confidence is growing that there is a substantial amount of capital active in the market for good commercial assets.

“Investors from around Australia and offshore continue to actively source and compete fiercely for well-located and income-producing Melbourne commercial property assets, even in the uncertain environment,” James said.

Both campaigns were highly competitive. Burke Road generated 8 offers, meaning there are 7 underbidders out there with well over $70 million to deploy into the market, while the 372 Wellington Road, Mulgrave campaign saw 4 underbidders put forward strong offers.

“These campaigns alone have demonstrated there is a combined $100 million of capital actively pursuing Melbourne commercial property assets,” James said.

Bourke said the Burke Road property’s underlying fundamentals presented a set-and-forget cornerstone asset.

“The property’s secure lease to a premium tenant in the Commonwealth Bank was a major drawcard for investors, with the attractive return offering a premium to having money sitting in the bank in the historically low interest rate environment, and a safer proposition than putting money into a volatile share market,” he said.

“Offshore investors’ showed an added interest due to the attractive exchange rate resulting from the lower Australian dollar, as well as Melbourne’s worldwide reputation as an investment safe haven.

“Investors are recognising that Melbourne commercial properties present a compelling investment proposition, and that now is an ideal time to acquire a strong income-producing asset.”

James noted that marketing of the asset had to be converted from an Auction campaign to Expressions of Interest.

“There has been some talk of commercial sales coming to a halt, particularly as auctions have been put on hold, but this campaign witnessed remarkable depth in the bidding, and demonstrated buyers will still chase properties with strong underlying fundamentals.

He said that the sale price for both properties showed firmer yields than expected.

“Whilst the COVID-19 issues were building during the sale campaigns, it may well be that the return and security of major and well-leased commercial assets will see an appreciation in values.”

Bourke said the inner-east has further solidified its status as one of Melbourne’s most highly-regarded locations for investors around Australia and overseas.

“The Burke Road retail and lifestyle strip services an affluent and established catchment that is one of the most prized in Melbourne, the high-profile Camberwell Junction precinct is the shopping and lifestyle heartbeat of Melbourne’s inner-east.

Fitzroys has now sold $16.34 million of commercial properties along Burke Road, Camberwell recently, including the sale of the dual-fronted freehold at 628 Burke Road, for $4.28 million.

James, Bourke and Fitzroys colleague Shawn Luo negotiated the sale of the Mulgrave office building via Expressions of Interest, on behalf of a private owner who had held the property for more than 10 years. The deal was struck within 24 to 48 hours after the close of the competitive campaign.

Zoned Special Use Zone - Schedule 6 under the Monash Planning Scheme, the high-profile, 2-level office building of 1,675sqm is on a substantial corner site of 4,742sqm with a combined frontage of 129m to Wellington Road and Enterprise Court, and has 70 on-site parking spaces.

ASX-listed and government tenants within the building include Ambulance Victoria and IMCD Australia Ltd, for an estimated net income of around $479,600pa.

Luo said the new owner intends to hold the property long-term as a passive investment, and perhaps undertake repositioning works in the future to capitalise further on its strong return profile.

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 2020 Fitzroys.