Weekly Wrap

Fitzroys Weekly Wrap - 6th August 2021

Posted on 06th August 2021

000 Retail 05

Lots 1 and 3 & 4, 1 Porter Street, Camberwell
Respective owner occupiers bought the vacant ground floor spaces of 135sqm and 131sqm for a combined $2.308 million. They are within the Camberwell Village project, which features 140 apartments and a commercial retail and offices that are home to the head offices of Cabrini Health and Federal Treasurer Josh Frydenberg.

2 Alfred Place, South Melbourne

Roxy’s Piano Bar leased the 252sqm corner brick converted warehouse for 3 years at $72,000pa.

637 Burwood Road, Hawthorn

Bike retailer Peloton Cycles, specialising in 1970s, ‘80s and ‘90s-era makes, leased the 2-level, 106sqm building for 3 years at $22,000pa net.

5 Silver Grove, Nunawading

Laguna Pools & Spa leased the 700sqm showroom for 6 years at $120,000pa. The building also includes an upstairs office space.

000 Offices 05

268 Canterbury Road, Surrey Hills
Accounting firm Trident Financial Group bought the vacant 1,550sqm, 2-storey office building, on a 1,950sqm corner site, for $9.7 million, and will undertake a new fit-out before moving in later in the year.

11-15 Argyle Place, Carlton

An owner occupier paid $5.85 million for the 2-level 508 sqm building, and plans to move in after the lease held by the University of Melbourne ends over the next 12 months.

000Industrial 05

6 Sigma Drive, Croydon South
The 813sqm office and warehouse on a 1,003sqm site sold for about $2.3 million, on a 5.25% yield. It is leased to 2 tenants and returns $112,179pa plus outgoings and GST, and has 10 on-site parking spaces.

Unit 1, 48 National Drive, Truganina

An investor bought the 2,400sqm lot from the developer for $2.9 million off-the-plan.

38 Barclay Road, Derrimut

Zoned Industrial 1, the vacant 2,530sqm site sold to a local developer for $1.6 million.

Unit 1, 25 Trafalgar Road, Epping

A local investor bought the brand-new 324sqm office and warehouse facility for $890,000. It has a clear span warehouse with a 2nd level office, and 3 car parks on title.

Unit 16, 72 Makland Drive, Derrimut

A local owner occupier bought the 145sqm warehouse for $360,000.

000 Development 05

18 Development Boulevard, Mill Park
The 9,908sqm site sold for $4.85 million, having been recently rezoned to Residential Growth – Schedule 1, allowing for a height limit of up to 4 storeys, or 13.5m.

2-4 Vale Street, St Kilda

A buyer with value-add and future development plans paid $3.8 million for the 580sqm office, warehouse and showroom site with short-term holding income.

000 Specialised 05

289-291 Kooyong Road, Elsternwick
NEST Family Clinic signed a 30-year lease at $600,000pa for the under-construction facility that is due for completion in December.

000 Talking Points 05

Toorak Village Transformation
Orchard Piper has bought a 1,000sqm site on Toorak Road, Toorak, and is planning $100 million worth of apartments and commercial space – just a few metres away from Vicland’s $600 million office and retail development.

The 424-426 Toorak Road and 109 Mathoura Road site was bought by Orchard Piper for $20 million following negotiations with the Butler and Mendleson families to amalgamate and acquire 6 individual properties.

It will build a 7-storey building with apartments fronting Mathoura Road, and retail and commercial spaces fronting Toorak Road. The retail and commercial component of the building will be retained, with the top commercial floors to become its headquarters, while local pharmacist C. Wallis & Son, which has occupied the corner shop since 1981, has signed a pre-lease agreement to remain at the same location within the new development.

Construction is expected to begin in the 2nd half of 2022.

On the opposite site of the strip, Bill McNee’s Vicland has approval for a stepped 8-level building with more than 10,000sqm of office space and 3,500sqm of retail on the Village Way shopping arcade site at 489-505 Toorak Road, which it bought 2 years ago for $80 million.

Vicland this week sold its newly-built 9-level office building at 11 Wilson Street in South Yarra for $75 million, to German fund manager Real I.S. Group on a yield of circa 4.5%.

The 6,300sqm glass-encased building is fully-leased to tenants including co-working space provider The Commons, marketing company Revolution 360, research firm Ipsos and Impressive Digital, while Vicland’s offices are on the top floor.

Real I.S. manages $1.25 billion of assets in Australia and $8.8 billion globally.

Goldfields is currently developing a new 24-level office building at 627 Chapel Street, while close by in the South Yarra section of Toorak Road local developer Oreana Property has recently bought South Yarra Square and a neighbouring row of 4 adjoining Tudor-style shops for more than $48 million combined.

Meanwhile, the Jam Factory is set for a $1.4 billion redevelopment that will introduce a 170-room hotel, between 550 and 650 apartments and an office component.

Retail Recovery Heads to Chapel Street
Melbourne’s famous Chapel Street, South Yarra is seeing a new cycle of retail leasing activity in response to changing dynamics in the city’s shopping strips.

Tenants have used the conditions to move within strips to secure more prime positions, or to take up larger spaces, or expand into adjoining properties. For many landlords, the drive to secure or retain a tenant has become greater than the drive to try and obtain a benchmark rental rate.

Chapel Street, South Yarra is beginning to see a new cycle of leasing and a decrease in vacancies, from 20.4% heading into COVID down to 18.7%, according to Fitzroys’ new Walk the Strip report.

Fitzroys’ Lewis Waddell has secured a string of new deals to specialty retailers looking to take advantage of the strip’s recalibration of rents. Joe Bananas, which has boutiques in Sydney and New York, has chosen Chapel Street as the location for its Melbourne debut and taken space up at 583 Chapel Street.

Multiple tenants have made a shift from nearby to Chapel Street or within the strip in a sign that landlords are meeting the market and creating opportunities for tenants.

National menswear tenant M.J. Bale is relocating from nearby to a larger store at 558 Chapel Street with a more prominent shopfront, taking advantage of competitive rents in the process. Close by, fashion accessories retailer Trollbeads has moved from their shopping centre tenancy to 540 Chapel Street. They both follow fashion label Maatsuyker’s recent move from Greville Street to 574 Chapel Street.

On the other site of the street, Thurston and Howell are relocating within the strip closer towards the Toorak Road, to 495 Chapel Street.

Waddell said rental levels in some parts of Chapel Street, South Yarra had decreased to circa $500 to $600/sqm net, and incentives increased up to 25% in some cases, although typically they are at around 10% to 15%.

“South Yarra still has the strong fundamentals of strong, established catchment in an affluent area, an ongoing development pipeline and now, affordable rentals and strong incentive levels - this is very attractive for tenants.”

CBD Office Vacancies Up
The Property Council of Australia’s latest data showed vacancies in the Melbourne CBD increased over the 6 months to July by 2 percentage points to 10.4%.

It is the highest vacancy rate seen in the CBD since January 2000, while net absorption over the period was negative 96,635 sqm. Sublease space almost doubled to 120,000sqm.

There is 222,000sqm of new office space expected to enter the market in the 2nd half of 2021, 350,000sqm was introduced throughout 2020 before a lull over the past 6 months.

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.