The Commercial market has seen some very interesting results in recent months with a wide array of offerings about to launch into the marketplace between now and the end of the year.
Firstly, some results worthy of note include:
20 Terra Cotta Drive in Blackburn - sold for an impressive $2.610M– a staggering $5,700/ sq metre for a factory in the highly coveted Blackburn Industrial Estate. The auction attracted seven bidders which is an incredible sign of robust competition for a quality building in any market.
184 Barkly Street, St Kilda - sold after auction for $2.6M to an owner-occupier, this transaction representing a land value rate of $4,000 / sq metre for Commercial 1 zoned land.
975-977 Plenty Road, Kingsbury – a vacant corner development site, zoned for Commercial 2, sold for $1.840M reflecting $1,400/ sq metre.
Interest rates stabilising over the past few months has injected some confidence in investors and they can now anticipate their cost base for acquisitions more accurately in the short to medium term. However, the rate rises over the past 12 months have continued to see a clear softening of yields, which is an obvious flow on effect as banks have tightened their lending criteria for commercial investors in 2023.
The Land Tax changes in 2024 incorporating a lowering of the site value thresholds will result in every commercial property being impacted. A significant number of strata retail shops will now incur additional expense attached, and in most instances cannot be passed on to tenants under retail tenancy legislation.
As a result, we anticipate a rise in market rent expectations from property owners during market reviews, and a softening of yields for properties not previously affected by the Land Tax issues that have affected so many in recent years. Certainly very interesting times ahead in 2024.
In terms of properties coming to market in the next few weeks, we have some fantastic investment propositions in October and November.
We have Ivanhoe Medical Centre at 9 Livingstone Street opposite Ivanhoe Plaza with a renewed 5-year lease to a long-established medical practice on a substantial parcel of land. With growth in the mid-to-long term and an annual income of $150K this property has price expectations of $3-$3.3M and will go to auction on site in November.
Coming to market soon is 103-107 Lower Plenty Road in Rosanna is currently occupied by Australia Post and a well-established pharmacy with total income of $148K –representing a yield of circa 5%. This is a fantastic set and forget investment opportunity with absolute blue-chip tenancies.
1 Stradbroke Avenue, Heidelberg on corner Burgundy Street - an Expressions of Interest campaign closing 10th November. The property is directly adjacent to Austin and Warringal hospitals offers 1,115 sqm of mixed-use zoned land. This presents as a prime/rare commercial opportunity in the heart of Heidelberg.
We also have a range of Industrial properties coming up for auction with prices between $600K and $1.5M.
It will be a solid run through to the end of what has been an extraordinary year with some interesting ebbs and flows. Land Tax issues remain a constant source of discussion, with property investors rearranging their asset structures for the interesting times ahead in 2024. Don’t hesitate to approach us to discuss your position or to prepare for an objection, if warranted early in the New Year.
If you would like to discuss any aspect of commercial property, whether it’s assessing current market rent rates or timing of a potential sale, please don’t hesitate to make contact with our team.
