Why investors love regional retail property
Another high-quality regional retail property has hit the market, cashing in on strong investor demand for freestanding defensive assets with well-established tenants.
Colliers are selling a new Kmart in Bairnsdale, 278 kilometres east of Melbourne, leased until 2032 at more than $1 million a year.
The 15,600 square metre mixed-use zone is expected to fetch more than $20 million in an expressions of interest sale.
Real estate, particularly non-discretionary retail, is generally considered to be resilient in value during periods of high inflation.
“Competition has soared for these assets during the first half of 2023, with 60 per cent fewer assets brought to market compared to last year,” said Colliers’ head of retail middle markets James Wilson. “This has led to very competitive bidding and strong results.” He added that new retail developments are also providing attractive depreciation benefits, driving tax-effective income.
With few of these regional assets coming up for sale, there is fierce competition for any hitting the market. Last year, a 6666 sq m Bunnings store in Swan Hill was purchase by a Melbourne investor for more than $18 million, on a yield of less than 4 per cent.
A 3780 sq m freestanding Coles supermarket in Woodend was also sold for $33.3 million – a yield of 4.31 per cent.
Bayside potential
The site of former renowned bayside restaurant Dom’s Bistro – at 1117-1119 Nepean Highway, Highett – is hitting the market for the first time in 33 years.
Now leased to national seafood restaurant operator Kickin’Inn for of $148,000 a year, the 3652 sq m freehold property is being offered by JLL’s Jarrod Herscu, Tom Noonan, and MingXuan Li via an expressions of interest campaign.
Kickin’Inn is in final term of its five-year lease, with no further options, providing significant flexibility for future redevelopment into medical, childcare, fast food or other retail uses.
The property is in the Nepean Highway retail precinct, adjoining KFC, Officeworks, and Anaconda, and is less than 1500 metres from Westfield Southland. “We expect strong interest from national retailers looking to capitalise on the high-profile position,” Herscu said.
Robots on the march
A two-level office/showroom and warehouse in the tightly held Brooklyn industrial precinct has been leased to privately owned robot maker Automated Solutions for $104,000 a year.
The 770 sq m building at 34 Burgess Street is the company’s fourth site, and will allow it to further expand into the automotive, aerospace, machined metals and consumer and electronics industries internationally.
Guy Naselli, managing director of NSL Property Group, and Knight Frank’s Michael Satterley handled the deal.
Little Collins result
Two office suites on level two at 430 Little Collins Street – one of the oldest buildings in the CBD, built in 1883 – have been sold to a financial services company located in the same building and looking to expand.
Their long-term owner realised $9500 a sq m in the sale, a significant premium on the $8800 a sq m in another building transaction in July 2022.
“While there are obvious headwinds in the market, the strata sector is performing well, with purchasers drawn to the asset class given its insulation against rising land tax,” said Cushman and Wakefield agent George Davies, who handled the deal with colleagues Anthony Kirwan and Jeff Ha.
It is the sixth strata office transaction brokered by the Cushman team in 10 days.
