A Melbourne CBD corner property occupied by a popular hospitality operator has sold in a strong result that shows the confidence buyers continue to have in the city, as well as the ongoing investor shift from residential to commercial property.
Fitzroys’ Lewis Waddell, David Bourke and Ben Liu sold the strata-titled 302 Flinders Lane on behalf of a local vendor, after a campaign that generated 72 enquiries from local, interstate and international investors.
A local SMSF investor won out.
The sale price came in at a building rate of $10,000 per sqm and a tight 5.3% yield.
Located a few metres from Elizabeth Street, the recently refurbished 164sqm ground floor corner property was offered with a 7+5-year lease to busy Chinese restaurant North East China Family. The property features a restaurant fit-out with a commercial kitchen and mezzanine private dining areas, and has an extensive corner frontage to Flinders Lane and Staughton Alley.
“Investors were attracted to the opportunity to acquire a set-and-forget Melbourne CBD property investment with a strong tenant covenant,” Liu said.
“We’re seeing investors locally, around the country and offshore demonstrate a genuine confidence in the long-term prospects of the Melbourne CBD, which has shown a comprehensive rebound and is now really humming.”
Fitzroys’ latest Walk the CBD report shows vacancies in the CBD have come down over the past 12 months from 6.1% to 4.6% - a long-term, pre-COVID low. Hospitality, food and beverage and entertainment operators were again the driving force of enquiry and take-up, amid growing demand for eateries and dining experiences, and a visitors spending more on their CBD outings.
Flinders Lane vacancies were down to just 3.2%, according to Walk the CBD, while Elizabeth Street vacancies fell further to 5.3%. Both figures have improved dramatically year-on-year since COVID.
Bourke noted that there is a shift from investors looking at commercial property rather than residential property in light of the Government’s changes to the capital gains tax and negative gearing.
“We’re seeing a broader range and a deeper pool of investors looking at commercial property, and our sales campaign for well-leased, well-located assets are proving to be particularly competitive.”
The 302 Flinders Lane property is close to Flinders Street Station and the brand-new Town Hall Metro Station access point, and is surrounded by a diverse range of eateries including Brunetti, Pidapipo, KFC, McDonald’s, Grill’d, and a huge number more along Elizabeth Street and Flinders Lane.
The property is exceptionally well connected, situated close to the major train stations and being within the Free Tram Zone, with multiple tram routes operating along nearby Elizabeth and Flinders streets.
Waddell said investors were also attracted to the property being strata-titled.
“Strata-titled assets come with lower land tax obligations and typically higher net returns, which has become very attractive following the Federal Government’s proposed taxation changes,” he said.
“It’s been a drawcard for a range of investors in the CBD and throughout the suburbs.”