Fitzroys capitalise on shopping strip strength at portfolio auction

The strength of the shopping strip was the theme of the day for commercial property agency Fitzroys at their Melbourne Retail Portfolio Auction. 16 high-quality landholdings were presented at Hawthorn’s Leonda by the Yarra this morning, their calibre substantiated by some tremendously sharp yields. 

This collection of freeholds was amassed by the late Harry Oviss, who earned a reputation as a successful clothing entrepreneur, construction magnate and art collector whilst he acquired and developed property all across metropolitan Melbourne. His interests were clearly demonstrated by this portfolio; he enjoyed investing in high density retail localities, prioritising position in his strategy. 

“Well-located commercial property with long-term leases and sizeable annual increases like these are considered to present a more secure investment and safer place to put money in the current climate, even with further interest rate rises expected,” Fitzroys’ Mark Talbot said. 

The locations are, indeed, impressive. Swan Street in Richmond; Koornang Road in Carnegie; High Street in Preston. Contained within the portfolio was major exposure to some of the most frequented shopping districts that Melbourne has to offer. Naturally, these properties inspired some impressive results. For example: 49 Koornang Road in Carnegie is a tenanted property currently occupied by well-regarded food retailer, Lu’s BBQ, and was sold for $1.4 million, at a passing yield of 3.15%. 

49 Koornang Road, Carnegie VIC

Sub-four per cent yields were not exclusive to this sale. The Pad Cha Thai Restaurant at 319 High Street in Preston was able to inspire some spirited bidding from both in-room and online investors, and that resulted in one individual securing the landholding for $1.04 million, generating a passing yield of 3.76%. This property was one of a few at the auction that possessed a rare 5% annual rental increase figure, and that factor, in combination with a highly flexible Priority Development zoning, was motivation enough to produce a sizable sale price.  

These familiar, more inner-city adjacent locations might garner much of the attention, but some of the most impressive results of the day were found in the suburbs on the outskirts of Melbourne. When asked which properties Fitzroys’ Tom Fisher was most excited to see fall under the hammer, he highlighted the north-west. “The St Albans properties are definitely very interesting,” he stated.  

That they were. Three sites in close proximity to one another on Alfrieda Street in St Albans were up for sale, and they obtained some of the most significant values within the portfolio. Of particular note was the Quang Vinh eatery at 64 Alfrieda Street, which sold for an exceptional $2.51 million, equating to an estimated yield of 1.99%. On a 5+5 year lease, this freehold captured the imagination of bidders, and contributed to an average net yield of 2.4% for the three St Albans properties.

64 Alfrieda Street, St Albans VIC

Agents Tom Fisher, Mark Talbot and Chris Kombi marketed the portfolio, and they used the success of the auction to illustrate how the market has pushed onwards despite recent hurdles. “Interest rate rises clearly haven’t perturbed the market, despite negative press,” Talbot explained. “Investors clearly consider well-located Melbourne retail properties with quality leases a secure investment amid sharemarket and residential market volatility.” 

With a total volume of $29.14 million, on a net yield of 2.99%, Fitzroys’ latest portfolio auction was an indubitable success. Carried by the strength of the shopping strip, this collection of properties has exceeded expectations.