Greensborough sale shows green shoots for child care assets: Child care centre operators are beginning to feel the benefits of the Federal Government’s recently introduced $3.5 billion Child Care Subsidy package, spurring confidence from investors looking for quality, well located assets.
Chris Kombi and Terence Yeh of Fitzroys sold the St Helena Early Learning Centre in Melbourne’s north-east growth corridor suburb of Greensborough for $7.26 million, at a 5.95% yield to a local investor, following an expressions of interest campaign in conjunction with CBRE on behalf of a private owner.
The prominent 4,224 sqm site at 189 St Helena Road has a 1,001 sqm purpose-built facility and is licensed for 120 places. It currently returns $432,000pa plus GST on a new 15-year lease, with three further terms of five years and fixed 3% annual increases.
“Amid reporting about a general oversupply of centres, demand from investors in some metropolitan areas remains strong, especially for new state-of-the-art centres such as this, which include large, valuable underlying land holdings,” Kombi said.
He said the tenant, Childcare Opportunities, which trades as St Helena Early Learning, has spent more than a decade in the construction and operation of childcare centres.
“The property’s build and selected location reflected their experience in the industry, and investors took note of this in big numbers.”
Publicly listed operators have declared in recent weeks that industry concerns of an oversupplied market have passed, and revenues, occupancy rates and “days sold” have been increasing as the sector begins to absorb the benefits of the Child Care Subsidy following a transition period after its introduction in July. The Subsidy quickly took child care costs from long-term highs to historic lows.
Yeh said the 189 St Helena Road site is strategically located close to a number of primary schools within one and two kilometres, a factor typically associated with strong demand for childcare services.
Queen Vic Market prompts local redevelopment: A North Melbourne corner site of 472sqm opposite the Queen Victoria Market, with a 65m frontage and currently comprising four two-level shops, has sold for $7.775 million. Zoned Capital City 5, the 268-276 Victoria Street site is primed for a future mixed use development on the edge of the CBD and directly across from the Market precinct that is undergoing significant change.
A few metres away, three adjoining retail freeholds on a 340sqm site at 106-110 Peel Street, next to the La Porchetta restaurant, sold for $4.98 million with a permit for a seven-level mixed use project.
On the other side of the CBD, developer Tim Gurner has acquired the former Church of Our Lady of the Assumption corner site of 1,550sqm in South Melbourne for around $10 million. The 77 Park Street and 286 Kings Way property currently has a G8 Education child care centre operating from the church, in addition to other commercial buildings, and traded with a permit for 44 apartments as well as six townhouses conversions within the church.
Disclosure: The weekly Fitzroys Property Wrap is for information only on transactions in the Melbourne property market. Fitzroys provides this information as a public service. We are not purporting that all sales and leases within this report were transacted by Fitzroys.