Weekly Wrap

Fitzroys Weekly Wrap - 21st May 2021

Posted on 21st May 2021

000 Retail 05

Showroom 5, 36-44 Lauderdale Road, Narre Warren
The modern 495sqm showroom building sold for more than $2.1 million with a lease to The Golf Clearance Outlet. It has a 5+5-year term returning $122,133pa net with fixed 4% annual increases.

533 Highett Road, Highett

The 2-level, 142sqm retail and office building on a corner site sold for $1.115 million.

Shop 1B, 7 Yarra Street, South Yarra

A local investor paid $900,000 for the 67sqm shop, which is leased to Ozzy Thai on a 5+5+5-year term, returning $53,560pa net plus outgoings and GST.

219b Elizabeth Street, Melbourne

Located opposite The Strand Arcade, the 50sqm space was leased to City Phones at $135,000pa on a 5-year deal with a 5-year option.

Shop 2, 533 Mt Alexander Road, Moonee Ponds

Simary Beauty Pty Ltd, trading as Hydra Skin Bar, leased the 87sqm space on a 3+2-year deal at $20,000 plus outgoings and GST for a new beauty salon.

000 Offices 05

45 Porter Street, Prahran
The 390sqm site sold for $3.314 million. It has Activity Centre zoning with current improvements including a 220sqm converted warehouse, with 7 on-site car parks.

395 High Street, Ashburton

The vacant 140sqm single-level building is on a 226sqm site and sold for $887,000.

822 Glenferrie Road, Hawthorn

Morgan’s Stockbroking leased the 290sqm space for 5 years at $130,000pa net, or $450/sqm.

588 Swan Street, Richmond

Medical device company NuVasive leased 400sqm on the ground floor of the Garda Capital-owned Botanicca 9 building at $500/sqm.

000Industrial 05

40 Sheehan Drive, Heidelberg West
The 3,800sqm facility occupied by dips maker Simply Delish sold for close to $9 million, on a yield of circa 5%. Heidelberg Capital bought the property at the end of 2019 for $7.1 million at a 7% yield. Simply Delish has a long lease over the 4,850sqm site.

203-207 Nepean Highway, Gardenvale

Factor Bikes owner Kel MacCulloch sold the business’s headquarters for $4.75 million, 18 months after acquiring the 1,115sqm site for $3.6 million. The new owner is a pharmacy owner occupier. It had previously been owned by Coles Group’s development arm and used as a car yard.

Unit 9/126-134 Fairbank Road, Clayton South

The vacant 518sqm strata-titled office and warehouse, with a 3-tonne travelling crane and on an 803sqm site, sold for $1.38 million.

68 Henderson Road, Rowville

Global medical devices supplier Arjo Australia leased the 1,738sqm office and warehouse for 7 years at $206,760pa.

000 Development 05

168-170 Boronia Road, Boronia
A local investor/developer bought the combined 1,952sqm corner site for $3.1 million. It is zoned Commercial 1 and is located opposite Boronia Mall.

21 Gladstone Street, Kew

A Sydney-based accounting firm bought the 1960s block of 8 2-bedroom flats for $4.5 million, at a 2.6% yield, from investor-developer Clement Lee. The 919sqm site has a permit to build 4 more units.

000 Specialised 05

61-63 Chandler Road, Noble Park
The double-storey 642sqm childcare centre leased to Story House Early Learning sold for $6,742 million, on a 4.78% yield. Story House’s new 20-year lease has 3 options of 5 years each and returns $322,089pa plus outgoings and GST net.

000 Talking Points 05

Strata Assets in the Spotlight
Investors looking to shore up their income stream continue to turn to strata-titled Melbourne retail assets with long leases.

Fitzroys’ Chris Kombi and Ervin Niyaz have quickly sold 4 shops within Mosaic Village, at 53 Mosaic Drive, Lalor, for a combined $2.6 million.

The properties range in floor area from 54sqm to 101sqm and sold at an average yield of around 5%.

They include:
• Shop 2 - leased to Old Socks Laundrette on a 7+5-year term
• Shop 9 - leased to Fatwraps for 7+7 years
• Shop 3 - leased to Lord of Dough for 5+5+5 years
• Shop 6 - leased Mosaic Convenience Store for 10+5+5 years

Kombi said the properties were snapped up separately by SMSF investors within 2 weeks, demonstrating the huge appetite for passive, well-leased assets in the COVID-normal and ultra-low interest rate environment that is satisfied by strata-titled properties.

“Investors remain on the look-out for assets with secure income during the uncertainty of the COVID era, while the Reserve Bank has flagged interest rates will remain at their historical low for some time, and the share market presents volatility,” he said.

“Each of these assets were offered with long leases and have traded on an average yield of circa 5%.”

Kombi said investors had also noted that strata-titled property offers an easier management proposition. An owners corporation oversees the maintenance and low land tax liabilities don’t cut into the return, while the Mosaic Village properties are recently-constructed, offering strong tax depreciation benefits.

“Over the past 12 months we’ve seen a rush of enquiry from SMSF investors preparing for their retirement, or retirees wanting to buy a property that will immediately improve their income,” Niyaz said.

“Demand from this segment of the market has been growing and we expect that to continue in this environment.”

He added that well-located properties in high-growth areas continue to be sought-after. Mosaic Village is strategically positioned within the fully-developed, 650-lot Mosaic Living Estate in Melbourne’s northern growth corridor, and anchored by a state-of-the-art Nino Early Learning Adventures childcare centre, and comprises eateries, gym and mini supermarket.

Fortis Sees Strength in City Fringe Offices
Developer Fortis has thrown its confidence behind Melbourne’s city fringe office market, paying $26.9 million for a 1,850sqm site in Cremorne on which is will build an 9-level office building with an end value of $130 million.

The $40 million new build at the 65-81 Dover Street will deliver a 9,250sqm development with 8 floors of offices and ground floor retail.

Melbourne-based developer Tope Lane bought the amalgamated site in 2019 and secured a permit late last year before selling.

Fortis also bought the 1,298sqm corner site at 8 Brighton Street in nearby Richmond late last year with plans for a 10-level mixed-use development, and acquired a South Melbourne site for a new 6-level office development.

It is planning a $300 million mixed-use development on a 5,500sqm Smith Street site in Clifton Hill, directly opposite Development Victoria’s Fitzroy Gasworks project.

Local Developer Takes Historic Brighton Homes
A local developer has paid $15 million for adjoining historical Brighton home sites. They cover a combined 3,196sqm of land and include a dual-storey Victorian terrace at number 19 and a Federation villa, Dromara, built in 1915 at number 25. They were respectively purchased in December 2014 for $5.93 million and $4.8 million in 2018.

Next door, at 6 Grandview Road, is Carpe Group’s 3-storey 10-townhouse development.

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 2021 Fitzroys.