A showroom investment with long-term redevelopment potential in the inner-east Melbourne suburb of Richmond sold at auction today $14.8 million – well over initial price expectations of $10 million.
The single-storey building at 485-497 Bridge Road (pictured top, left and bottom) is leased to Adairs and earns annual income of about $400,000.
The furnishing retailer has no option to renew its lease beyond 2027 – a point made by the marketing agents, which touted the potential for “development or reconfiguration in future”.
The property was acquired by an Asian
syndicate on a yield of 2.1 per cent (based on the net rent of just over $300,000). Local developers including George Saade and Nick Williams were also active bidders, according to sources.
Before a crowd of about 150 people, 91 bids were made from 12 groups – eight local and four Asia-based, the selling agents said.
On a 1658 square metre block with two street frontages, the offering included a 1135 sqm showroom and 20 on-site car parks.
Richmond, about two kilometres east of the Melbourne CBD, has become one of the city’s most in-demand suburbs for offices in recent years – agents regularly renting commercial space for in excess of $500 per square metre, per annum.
The “ripping” auction, according to Mr James, “is a major sign of strength in the Melbourne retail investment market” which reflected “a flight to quality towards good quality commercial property with underlying land value”.
“We went to the market with expectations north of $10 million, with the sale price…clearing well in excess of that number and the vendors reserve,” the broker added.
The deal comes 10 months after another Richmond asset at 143-151 Bridge Road sold at auction for $14.11 million – or $3.11 million over the reserve. This 1134 sqm building, on a 720 sqm block, and returning annual rent of $533,000 was one of two assets offloaded that month by the Bloom family, which founded fashion chain Portmans.