As one of Australia’s most famous shopping destinations gets a facelift, investors are proving willing to lay down large sums for iconic properties in the rejuvenated area.
A 311-square metre, two-storey building along Melbourne’s famous shopping strip at 517-517A Chapel Street has sold for $3 million at a sharp 3.9 per cent blended yield.
The dual-tenanted site in South Yarra is home to local favourites Eternal Bridal, which occupies the ground floor on a new 3+3+3-year lease, and Katuk Bar, which looks down on the bustling street from the building’s second floor and currently holds a 10-year term.
Fitzroys’ Lewis Waddell and Chris Kombi secured the deal for the sellers, who were a private local family.
Mr Waddell noted that nearby upgrades to the area had attracted increased interest from investors looking to secure retail holdings set to make steady gains.
“The Jam Factory redevelopment is directly opposite and this was a big motivation for interest in the property from buyers, who were anticipating strong rental growth to follow,” he said.
The $1.5 billion redesign – a project of Newmark Capital, Gurner and Qualitas – is currently in the works, but already investors are noting the prudent moves to be made on nearby properties.
Including 18,500 square metres of retail space, the Jam Factory will deliver far more than shoppers to the area. The precinct will also introduce more workers, residents and tourists to the strip with 20,000 square metres of offices, 400 residences, and a five-star hotel currently in development.
“All investors were looking for long-term return and further upside in the future with all the development happening nearby,” Mr Waddell said of the fierce competition for the Chapel Street property.
Mr Kombi added that Melbourne’s shopping strips had shown “remarkable resilience over the past two years”, noting that the vacancy rate for Chapel Street in South Yarra had actually tightened during COVID.
The 517-517A Chapel Street transaction comes shortly after Fitzroys sold four adjoining freeholds just up the road at 587-593 Chapel Street for $5.83 million. This property is currently home to eateries Jumi’s Cafê, Bisonte and Green Cup.
And only last month, down the road in Brighton, the firm worked in collaboration with Aston Commercial on the impressive $16.2 million sale of 71-73 Church Street and 36 Carpenter Street, a heritage-style 990-square metre building that counts stores such as Nike and Ecco footwear among tenants.
ABOUT THE AUTHOR
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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