Postscript: the property sold on May 28, 2020 – two days after this story ran.
Balaclava warehouse-turned-reception centre Red Scooter – which hit the market as social distancing measures were introduced, before being withdrawn – was relisted this week.
The 333 square metre site at 25 William Street, seven kilometres south east of Melbourne, is for private sale at $2.3 million.
That price reflects a low 3.6 per cent yield but also a below-market rate per sqm of land (about $6900).
Barry Plant Commercial director Benjamin Klein, who is marketing the property with Just Commercial’s Steven Kalb, thinks the ideal buyer is somebody prepared to enjoy some strong income and wait out the lease before unlocking the redevelopment potential.
Consistent with planning documents released by both major state governments since 2001, this industrial pocket of Balaclava, being near the train station and Carlisle Street trams and retail, is in the medium term expected to be rezoned to allow for apartment construction.
Office developer, user could scooter the occupier out sooner
With options, Red Scooter can stay at the Balaclava site until 2032.
However Mr Klein said, “if the opportunity presented the tenant would enter a discussion with the purchaser to negotiate buying him out of the lease”.
This puts owner occupiers and developers on the radar as prospective buyers.
The existing Industrial 3 gazetting would allow for the construction of a taller commercial building.
Next door, a 1480 sqm holding, developer 94 Feet recently lodged plans for an eight storey office.
“We are finding that this pocket of Balaclava is quickly becoming highly sought after for both commercial and residential habitation and is often referred to as the cousin of Cremorne,” Mr Klein added.
Red Scooter set up at 25 William Street in 2007.
Its rental agreement includes fixed three per cent annual rent rises after a market review this July and again in mid-2026.
Small pocket attracts buyers with deep ones
Balaclava – like Ripponlea which abuts it to the south – is a high-character pocket of St Kilda East.
Some major investors have recently bought there – amongst them Moose Toys co-chief executive officer Paul Solomon who spent $22.25m in 2018 on Beller House, a retail and commercial complex at 281-289 Carlisle Street – about 300 metres from Red Scooter.
Until it collapsed last July, Steller controlled a small site, 62-64 Nightingale Street, adjacent to 25 William Street.
Eighteen months ago 94 Feet – responsible for the redevelopment of Brunswick’s Hoffman Brickworks and currently proposing Ringwood’s tallest tower – spent $9.05m to buy the warehouse at 23 William Street, Balaclava, for its commercial building.
That deal valued land at $8,951 per sqm.
It picked up the factory site next door (#21) a year earlier for $7,700/sqm.
…and $60m of investment since 2017
At an onsite auction in 38 degree heat last November, 229-237 Carlisle Street traded for $7.5m, reflecting a comparable rate per sqm of $20,380 – almost as high as the $22,727/sqm achieved when 157 Carlisle Street was bought in 2018.
In December, 2017, 232 Carlisle Street sold for $11m (the land rate per sqm for this deal was $13,463).