Melbourne Dan Murphy’s sold on record yield – again

The 1.2 hectare Pakenham property (outlined) includes a portion which can be developed immediately.

A Pakenham Dan Murphy’s outlet has sold on a record yield, again.

The 1.216 hectare property – with a 5750 square metre tract that can immediately be developed as a major mixed-use project – has fetched $14.75 million from a local consortium.

Once a satellite town, Pakenham is now the centre of a growth corridor.

The result reflects a 2.94 per cent net passing return.

The seller, a Chinese investor, picked it up for $8.76m in 2015 at a 3.68pc yield – again setting a record for an Australian freestanding, freehold, Dan Murphy’s outlet.

Prior to 2008 the undeveloped parcel, 8 Portobello Road, was owned by the council.

Until about 25 years ago considered a satellite town, Pakenham, 50 kilometres south east of the CBD, is now at the centre of a metropolitan growth corridor.

Income, secure tenant

Endeavour-controlled Dan Murphy’s initial lease at 8 Portobello Rd expires in four years, but with options, it can stay until 2056.

The asset includes 83 car parks.

The income is derived from both base and percentage rent.

JLL’s Stuart Taylor, Tom Noonan, MingXuan Li and Jarrod Herscu with Burgess Rawson’s Zomart He, Matthew Wright and Billy Holderhead were the agents.

“The sale reflects a new benchmark in the Dan Murphy’s freehold investment market, bettering the 3.22pc yield for a store in Alphington, Melbourne, in 2017 and the sale of the retailer’s site in Malvern, also in Melbourne, which transacted earlier this year on a yield of 3.48pc,” they said (story continues below).

A Chirnside Park Dan Murphy’s store (outlined) sold on a 3.94 per cent yield two years ago.

A Chirnside Park store rented to the bottle shop traded in mid-2020 for $12.52m, reflecting a 3.94pc return, they added.

Dan Murphy’s Gladesville traded at a 3.8 per cent yield in 2020.

Not long after – in regional Wangaratta – a store exchanged for $8.1m reflecting a 3.68pc yield, according to the executives.

Zoning, development upside

The development site portion of the Dan Murphy Pakenham property is zoned Comprehensive.

It abuts both a parcel earmarked for a mixed-use project and the Coles-anchored Village Lakeside East, on Lakeside Boulevard.

An Aldi supermarket is in this pocket too.

The property also fronts the Princes Freeway where it is opposite a Bunnings and Officeworks and diagonally adjacent to a Home Co bulky goods centre.

Retail transactions have been subdued in Victoria in 2022…totalling $676m, down $1.96 billion, or 65pc, at this point in 2021, according to JLL Research.

“There have only been a few major retail assets transacted this year in Victoria, with neighbourhood and sub-regional centre transactions being extremely quiet,” Mr Taylor added.

“We attribute this to the record volume of sales in 2021, with many landlords already completing portfolio repositioning strategies, however there is no doubt that vendor confidence at the top end has waned,” he said.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of