Weekly Wrap

Fitzroys Weekly Wrap - 9th October 2020

Posted on 09th October 2020

000 Retail 05

173-183 Murray Street, Colac
A private investor bought the 1,868sqm Cheap as Chips showroom, on a 2,460sqm site with 28 parking spaces, for $3.72 million at a 7.4% yield. Cheap as Chips signed a 10-year lease with options over the former Coles supermarket in 2017.

325A Main Road, St Albans
An owner occupier purchased the vacant 400sqm shop on a 541sqm site with ROW access for $2.2 million.

1 Russell Street, Hawthorn East
A new bakery, café and restaurant will open at the 97sqm warehouse, which was leased on a 6-year term at $30,000pa. The operator has several venues around Melbourne.

188-196 Gertrude Street, Fitzroy
Creative web development firms, It’s All Fluff and Love & Money, are moving into the 215sqm space formerly occupied by Contemporary Art Spaces. Both signed 4-year deals at $132,500pa net.

000 Offices 05

1211-1213 Toorak Road, Camberwell
Kitchen and laundry appliances importer Eurolinx Pty Ltd sold the vacant 1,225sqm 2-level office, showroom and warehouse building for $6.9 million to a local owner occupier. It is on a corner site with 22 parking spaces.

10/1 Milton Parade, Malvern
Public transport company ComfortDelGro leased the 170sqm suite for 3 years, at around $310/sqm.

000Industrial 05

7 Scoresby Road, Bayswater
The 800sqm showroom and warehouse sold for $985,000 to an owner occupier.

115-117 William Angliss Drive, Laverton North
Mahoney’s Transport signed a 7-year lease for the 15,000sqm facility at $80/sqm.

89-95 Boundary Road, Laverton North
Heavy vehicle hire business TR Group leased the 4,000sqm office and warehouse for 10 years, at $950,000pa.

Unit 3, 59-63 Mark Street, North Melbourne
Ericsson Australia leased the 927sqm office and warehouse with 9 on-site parking spaces at $150,000pa for 3 years.

885 Mountain Highway, Bayswater
Relocating from Scoresby, Crux Biolans leased the 430sqm laboratory space for 5 years at $170/sqm. The owner is Integrated Logistics Partners.

000 Development 05

57-59 McCrae Street, Dandenong
A local developer paid $2.6 million for the 2,097sqm site, which has a permit for 14 townhouses.

307 Huntingdale Road, Chadstone
The 951sqm site has a permit for a 3-storey building with 14 apartments and basement parking, and sold to a local developer for $1.66 million.

71-175 Beechworth Road, Wodonga
A developer bought the 2,457sqm Activity Centre-zoned corner greenfield site for $1.125 million.

000 Specialised 05

7 Village Way, Pakenham
The G8 Education childcare centre on a 2,500sqm corner site sold for $4.41 million, with a 10-year lease and returning $262,544 plus outgoings and GST. It is licensed for 120 places.

000 Talking Points 05

Three Super-Prime, Central Car Park Investments Offer Ultra-Rare Opportunity
Three super-prime Melbourne CBD and St Kilda Road car park investments have come to the market, offering an ultra-rare chance to purchase assets within a prized sector that is expected to be particularly strong post-COVID.

Fitzroys agents Paul Burns and Chris James are marketing the 3 assets, located in the heart of the St Kilda Road precinct and in the Melbourne CBD. The 3 lots are being offered for sale by EOI “in one line or separately”.

Together, the fully leased portfolio comprises 677 bays and 64 storage units with a 5.37- year weighted average lease expiry, and a total net income of more than $2.045 million per annum. The assets include:

- 1 Queens Road, comprises six levels of car parks with 523 bays (650 when stacked), plus 61 storage units within the 14-level office and residential building, St Kilda Rd Towers.

- 452 St Kilda Road, comprises three levels of car parking with 80 bays, plus three storage units, within a 21-level hotel and serviced apartments building.

- 480 Collins Street, offering a generational chance to secure the only car park in the Melbourne CBD that has direct access from Collins Street. The asset comprises two levels of car parking with 74 bays (110 when stacked), within a 20-level office and hotel building located in the new centre of Collins Street.

Each asset is being offered with a long-term lease in place. The tenant has operated a profitable car parking business in each premises over many years.

“COVID-19 has had an impact on the local, national and international property markets. Secure cash flow is more important than ever,” Burns said.

“Commercial car park investments are likely to be particularly strong post-COVID. Employees will inevitably prefer driving to work as opposed to using public transport, and employers will secure parking bays to accommodate this preference.”

Burns said the fundamentals underpinning the commercial car park sector were sound and backed by policy at Council and State Government levels.

“Over many years, there has been a trend towards new buildings including minimal car parks. This, together with the ongoing

removal of on-street parking for bike lanes and tram super stops, development of new office and residential projects on car parking sites, and the fact that public transport has not been able to keep pace with increasing demand from population growth makes the demand outlook for existing car parks very bright.

“The tenants in these assets have committed to not seek any rent relief as a consequence of the COVID-19 situation, guaranteeing the purchaser a 100% return on their investment, without interruption. The secure lease agreements offer no vacancy risk for almost six years, and, if or when a lease expires, there are negligible re-leasing costs.”

The impending completion of the nearby Anzac Metro tunnel station in the St Kilda Road Precinct is likely to be the catalyst for a wave of new higher-density residential and office developments in the area. Burns said it is most likely many of the proposed new developments will be under-parked, as has been the trend for some time now, in both the St Kilda Road and CBD markets.

“After holding the assets for many years, the vendor has recognised the purchaser demand that exists for securely-leased investments where cash flow is assured,” Burns said.

James said interest is expected from domestic and offshore investors seeking an ultra-rare chance for investment portfolio diversification into the sought-after asset class, which is offering exceptional capital growth prospects.

“Very few investment-grade car parks have changed hands nationwide in the past three years,” he noted.

“Meanwhile, Australia continues to be internationally recognised as an investment safe haven, and due to their scarcity, prime CBD and CBD fringe locations are far more likely to withstand any market correction.”

Burns said the properties will show an attractive yield relative to alternative, quality investments which have achieved yields of 4% to 4.5% in the COVID-19 environment.

He said investors are showing a preference for easy-to-manage assets that require little capex, little or no re-leasing and lease incentives, and have guaranteed rental increases.

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.