Smith Street continues to prove its credentials as one of Melbourne’s best retail and commercial investment prospects, with the sale of a landmark three-level property the latest to show high value growth in line with the inner-north location’s development boom.
In the most recent deal, Chris Kombi and Shawn Luo of Fitzroys sold 62 Smith Street for $2.56 million under the hammer at a 3.28% net passing yield, and a huge land rate of $12,487 per sqm. Kombi and Luo acted on behalf of private owners.
Zoned Commercial 1, the property has a 250sqm building comprising ground floor shop, first floor office and basement, on a 205sqm site with a large rear yard and car park, and a highly prized corner frontage of more than 37 metres.
The property is leased to established tenants Bini Gallery and Timmins + Whyte Architects,
Multiple bidders competed for the building, which is positioned at the busy intersection of Smith, Langridge and Gertrude Streets, where the famous 86 tram turns up Smith Street.
“This was a rare opportunity to acquire a landmark property at the gateway to one of Melbourne’s most popular precincts,” Kombi said.
“Investors and land bankers were attracted to property’s strong future value add and further development potential, given the area’s large number of office and residential developments taking place nearby that will further underpin the strong trading throughout Smith Street and sustain rental growth.
“The property’s ideal city-fringe location, overlooking a landmark intersection on one of Melbourne’s most iconic tram routes.”
Kombi said the strong sale price achieved reflected a significant 43% uplift for the vendors. Fitzroys also sold the property the last time it came to market, in 2013.
“Smith Street is the heartbeat of the generational change seen across Collingwood and Fitzroy that has seen the area evolve into one the most vibrant Melbourne locations, with a world class hospitality and nightlife offering, and a booming commercial office market, making it an unbeatable 24/7 location.”
It comes just weeks after Fitzroys sold the freehold at 95-97 Smith Street for $4.575 million at a tight 3.4% yield. The sale price showed a 76% uplift in value on the previous transaction in 2010, also handled by Fitzroys.
“The two vendors have experienced outstanding uplift in value each of these properties over a relatively short period of time for a commercial property investment, testament to the rise in popularity of Smith Street over the past decade and a major improvement in investor sentiment for property in Melbourne's inner-north,” Kombi said.
“Investors, landbankers and developers are all demonstrating increasing confidence in the inner-north’s ongoing growth story.”
This has also been reflected in the sharp retail property sales yields achieved by Fitzroys along Smith Street recently, including 86 Smith Street, home to Biggie Smalls, which sold for $3.58 million at a 3.56% yield, and 129 Smith Street for $2.01 million at 3.3%.
Luo said the Collingwood area has seen strong and consistent growth over the past five to 10 years, becoming one of the most desirable destinations for professionals, students and young families, as Melburnians embrace inner-city living and seek to live and work close to bustling shopping, hospitality and nightlife destinations.”
Smith Street’s roll-call of hospitality tenants include Huxtaburger, Ides, Proud Sprout, Trippy Taco, The Builders Arms, Foresters, Sircuit Bar, Yah Yah’s, Biggie Smalls and Tokushima, and the property is also in close proximity to high-performing Coles and Woolworth supermarkets, Kathmandu, Bonds, Chemist Warehouse and major banks.
According to Fitzroys’ latest Walk the Strip report, Smith Street has among the lowest vacancy rates of Melbourne’s iconic shopping and lifestyle strips at just 2.7%.
Luo said the boom in inner-city living and commercial development on Melbourne’s city fringe has spread over to Collingwood, with a surge in commercial and residential projects anchored around the Smith Street precinct.
Major commercial developments include Grocon’s $120 million Northumberland project, Pace Development Group’s 10- storey office building at 51 Langridge Street, a recently announced $200 million office tower by major US investor and developer Hines, and Pellicano Group is planning a new office project at 207 Victoria Parade, on the corner of Smith Street.
The upmarket Victoria and Vine is one of the newer additions to the local residential development pipeline. Others include Little Oxford, nearing completion, the recently approved mid-rise project at 88-92 Smith Street, as well as The Lyric on Gore Street, Holme Apartments at 112 Smith Street, the six-level Lil’Ox on Oxford Street, and the seven-level 7 Hodgson Street.