Pace Development Group will close the financial year with a further $19.15 million added to its commercial results and new industry benchmark, having sold four tenancies at its Pace of Ascot Vale project, including a Metro Woolworths, to a single, local investor.
The four retail tenancies, comprising specialty stores and the supermarket, are located within the ground floor below the 76-apartment residential complex at 327-357 Mt Alexander Road. The tenancies were launched to the market in May via an expression of interest (EOI) campaign with price expectations set at approximately $17 million.
Competition for the site was fierce from the outset, with over 300 enquiries and 15 interested parties vying for the 2,253sqm holding. Interest from both private local and offshore investors saw the transaction go through three rounds of negotiations, before eventually closing approximately 13 per cent above the expected range.
The successful purchaser is a local Chinese investor, who has secured the property on an initial yield of 4.63%.
Pace appointed conjunctionally Stonebridge’s team of Kevin Tong, Justin Dowers and Rorey James with JLL’s Stuart Taylor, Tom Noonan and MingXuan Li to manage the Expressions of Interest process.
Stonebridge Director Kevin Tong said the extraordinary result was evidence of the market’s increasingly strong appetite for suburban retail opportunities.
“What was clear throughout the sales process was the sentiment for this type of investment continues to grow, particularly due to the strong supermarket covenant in addition to the pandemic-proof nature of a Woolworths supermarket,” said Mr Tong.
“This is the second supermarket our team have transacted to this investor, who only entered the retail investment market in 2017. A strong driver for buyers’ interest was the current low interest rate environment in addition to the opportunity to capitalise on the 5.5% stamp duty before the rise to 6.5% on 1st July 2021.”
Stuart Taylor, Senior Director of JLL Retail Investment said, “The yield achieved sets a new industry benchmark, being the sharpest yield for a strata-titled neighbourhood shopping centre in Victoria on record.”
“The price and yield also reflect new records for a ‘Woolworths Metro’ investment nationally, highlighting the incredible demand for non-discretionary retail assets in the current market” Taylor added.
James Simpson, Commercial Director at Pace Development Group, said the sale was the realisation of Pace’s strategy to offer the entire ground floor for sale given the existing retail offering, comprising hospitality, beauty, fitness and supermarket uses provided a diversified yet complementary portfolio to an astute investor.
“The incredible result that Pace achieved on this deal at Pace of Ascot of Vale paves the way for further acquisitions to be added to our pipeline and brings forward plans at other key projects across Melbourne.
“We are about to commence construction at 6 Cubitt Street, Cremorne in September and have just received a permit for our Hawthorn East office project, which we are looking to bring to market at the end of this year.”
Pace Development Group were also advised on the sale by the newly established Advise Transact, a specialised boutique commercial property advisory business established by former estate agent Mark Wizel.
