A prominent two-storey retail asset at the Windsor end of Chapel Street sold under the hammer for $14.96million last week, representing a yield of 3.5%.
Colliers International’s Tom Noonan and Ben Baines, in conjunction with Hocking Stuart Commercial’s Kenny Oliver and Charles Carty and ASM Commercial’s Andrew Manos, auctioned the high-profile building at 125-131 Chapel Street on Friday.
Bidding kicked off at $11million in front of a 200-plus lunchtime crowd, with four parties vying for the prize.
After almost 30 minutes and 74 bids, the building was knocked down to a local private investor, who joined the fray late at the $13.8million mark. He and another bidder fought it out in the final stages, taking the property to almost $2million over reserve with $10,000 increments."
“The record sale is reflective of the significant capital targeting premium retail investments in prime strip locations with long-term growth prospects,” Mr Noonan said.
“The campaign received more than 150 inquiries and the ultimate purchaser was attracted to the future rental upside and expansion potential."
Mr Baines said it was only the third $10million-plus sale to occur on Chapel Street in the past five years, following the sale of of a property at the corner of Toorak and Chapel Street, South Yarra ($12.85million) in 2013 and Hudson House at the corner of Chapel and Carlton Streets in Prahran ($10.8million) in 2014.
The property is 100% leased to a diverse mix of retail tenants, including Mad Mex, Kuma Sushi, Basilico and Lucky Liquor, as well as first-floor office tenants Reymond Communications and Yoga Australia. It currently returns a net rental of about $532,000 (+GST).
Mr Carty said the vendors purchased the asset for $3.2million in 2007.
“They have seen Chapel Street, Windsor transform from an eclectic mix of fashion and service retailers to a thriving food and entertainment precinct,” he said.
“A number of Melbourne’s most popular restaurants have all located there, including Hawker Hall, Mr Miyagi, Tokyo Tina, The Smith, Saigon Sally and Morris Jones."
Mr Baines said the continual gentrification of Chapel Street, Windsor was expected to provide the purchaser with strong positive rental reversion well into the future.