COMMERCIAL PROPERTY, SALES & LEASING

Retail strips renaissance thanks to remote working

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INVESTORS are reading the Work From Home trend and showing confidence in Melbourne’s shopping strips, snapping up a prime asset on Camberwell’s Burke Road for $6.88 million, as national traders flock to thriving suburban locations as more people embrace workplace flexibility.

The auction sale of 580 Burke Road resulted in a sale price of $1 million above the reserve, at a sharp 3.8% yield.

Chris Kombi and Chris James, agents from Fitzroys managed the sale on behalf of private owners that held the property since 1977.

“This result shows the market has undoubtedly recognised the resilience shown by Melbourne’s shopping strips over the past 12 months,” said Kombi.

The campaign drew strong local and international enquiries, with a local investor beating out multiple bidders at the auction of the 344sqm freehold, on a 361sqm site has dual frontage on Burke Road and Market Place and is zone Commercial 1.

“The depth of enquiry again showed there is a large volume of capital waiting to be deployed, after few high-quality properties were offered for sale over the past 12 months.

“We expect more investors will be seeking these types of opportunities in 2021.”

634 Burke Road will also go to auction, with James and another Fitzroys agent David Bourke appointed to market the property.

“Investors continue to identify well-located Melbourne retail and commercial property with strong tenancy profiles and long-term leases as ideal assets.”

The property, which sits on a 249sqm landholding is currently leased to national retailer Mecca Cosmetica and Spring Massage Therapy, for a combined return of $230,809.

“Burke Road, Camberwell has been ideally placed to weather the COVID period, with its quality tenancy mix of local and national traders, cafés and restaurants attracting visitors looking to have a coffee, catch-up with friends, or to break up the day and go shopping, particularly as the balance between commuting to the office and work from home becomes more widely practiced,” said James.

Further activity on the shopping strip included the recent sale of 751-753 Burke Road which sold for $7.55 million for a 4.1% yield, in Melbourne’s first auction of a prime shopping strip asset for 2021.

“The strong results are a reflection that confidence in retail property is returning to pre-COVID levels, and of the resilience of Melbourne’s shopping strips,” concluded James.

National retailers are turning to suburban locations as more people work from home. According to NAB’s recent Health Wellbeing Insight Report on working from home, despite concerns of loneliness, loss of social interactions with co-workers and a potential shift away from a work-life balance, many workers would choose to work more from home.

But Australia is not unique, work from home is also trending overseas. As a result, international coffee and sandwich chain Pret a Manger has abandoned its “follow the skyscraper” growth strategy in London and will pursue new locations in the suburbs as more Londoners work from home.

“The city will be very different to before Covid,” CEO Pano Christou told Bloomberg.

Pret a Manger has 389 stores in the United Kingdon, 340 are in London. However, since last summer, the chain has permanently closed 30 stores.

“We won’t be going back to the days of working in the office four of five days a week. Flexible working is here to stay.” Christou said.

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