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A prime retail investment located in the heart of Melbourne’s central business district’s retail “Golden Triangle” has changed hands for the first time in almost two decades.
The 413-square metre site was acquired by a private offshore investor for $32,610,000 with an ultra-low yield of sub-3 per cent, a land rate of $78,958 per square metre, and a building rate of $39,914 per square metre.
With the property currently tenanted by four ground-floor shops and a first-floor restaurant, the retail asset is also estimated to generate a combined income stream of over $1 million in passing rental.
The property last changed ownership in 2003, when Katerina Developments purchased the property, and it has since been held by the same private Melbourne family.
According to Colliers, which brokered the deal in conjunction with JLL, the property garnered strong interest from prospective buyers due to the property’s unique and sought-after location.
Located at 272-282 Lonsdale Street, the property is nestled within one of the busiest retail precincts in the city, where top-tier institutional investors have injected billions into the surrounding retail centres.
Given the large street frontages and flexible zoning, the site’s potential can also be maximised with a multi-storey high-rise development — subject to relevant approvals.
Due to the property’s prime location with its close proximity to new metro tunnel stations, and its substantial underlying landholding, Colliers described the property to have “significant future upside”.
A total of eight bids were received from local and international investors during the international expressions of interest campaign.
The selling process was facilitated by Colliers’ Oliver Hay, Leon Ma, Daniel Wolman and Matt Stagg, in conjunction with JLL agents Josh Rutman, Nick Peden and MingXuan Li.
Colliers national director Mr Hay said the asset benefits from extremely high traffic, which saw several investors eyeing this “rare” retail opportunity with a strong rental and capital growth potential.
“Despite rising interest rates and inflation, the retail sector remains confident as sales continue to outperform market expectations. As we leave the pandemic behind, location is more important than ever when we’re seeing a rapid spike in customers returning to physical stores,” he stated.
Colliers director Mr Ma added: “Being situated in the epicentre of Melbourne’s retail core and arguably one of the most popular and recognisable intersections in the CBD, Swanston and Lonsdale Street, a location of this calibre brings endless growth opportunities for this asset.”
JLL director Mr Peden said the property could present a multi-level retail, commercial, boutique hotel, hospitality and rooftop activation in the future by alternatively adding further levels to the existing building.
With all current leases in the building structured to allow vacant possession by 2027, JLL’s Mr Rutman said that the new owner has the flexibility to capitalise on the Melbourne CBD’s dynamic retail market by adding value, redeveloping or potentially owner occupancy.
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