Developers, brothers Morry and David Schwartz, have banked $21.55 million selling a retail investment on the ground floor of the Liberty Tower apartment building, at 620 Collins Street.
The 639 square metre retail space, configured into eight shops, is at the north-east corner of Spencer Street, opposite the Southern Cross train station.
IGA Supermarket – which is backed by Metcash, and Gloria Jean’s Coffee are amongst the occupiers. The asset returns base annual rent of more than $890,000.
On that basis, it is trading on a low passing yield of about 4.1 per cent.
The deal also values the lettable area at more than $33,000 per square metre.
“My brother and I in conjunction with Roger Hart, purchased the land from Melbourne City Council in 2001 and Liberty Tower was developed – one of the first residential towers to be developed in the CBD,” the vendors said when the site was listed last month.
“What has transpired on this corner since then is beyond our imagination. It continues to go from strength to strength with new hotels and residential towers, the biggest and most active train station in the CBD and the continuing growing foot traffic has been a major bonus for our retailers”.
The offering provided “remarkable value-add opportunities via tenant repositioning, activation of additional tenancies and significant rental growth” according to the CBRE agents marketing the portfolio, Josh Rutman, Max Ruttner, Nathan Mufale and Dylan Kilner.
They described it as “an opportunity to own an entire city corner within the fastest growing precinct of the Melbourne CBD”.
The 50-level Mandarin Oriental Hotel and 78-storey Premier Tower, as well as significant other residential and hotel, and education developments, are taking shape in the immediate area, Mr Rutman said.
“Within the next few years there will be thousands of brand new apartments within five minutes walk of Liberty Tower, while the growth of Southern Cross Station is also expected to boost population growth in the area. This growing residential base will help place downward pressure on retail vacancy and ensure the area remains a sought-after investment destination”.
Mr Ruttner said that the corner of Collins and Spencer streets is becoming the focal point of the city as the Docklands precinct reaches maturity. The site the Schwartz brothers have just sold has more than 70 metres of street frontage to this intersection.
Collins Corner was offered for sale last night as part of a CBRE portfolio auction event.
Before a crowd of several hundred people, five other assets were sold including an Officeworks occupied complex in Hobart, which traded for $11.725 million. A 7/11 leased service station in Kallangur, Queensland, sold for $5.27 million.