Elsternwick sale continues suburban retail resurgence
A shop on Glen Huntly Road in Elsternwick has changed hands for more than $2.5 million, amid an increase in demand for space in Melbourne’s suburban strip retail market.
Currently occupied by longstanding massage parlour, Thai Soul Massage & Spa, 324 Glen Huntly Road has been purchased by a local buyer on a yield of just 2.2%.
The 210sqm property is one of four to sell within a week through CBRE’s Melbourne Strip Retail Investments team in early May, while there has also been strong leasing activity.
The Elsternwick sale closely follows transactions in South Melbourne’s Clarendon Street ($2.94m, 3.8% yield) and York Streets ($2.05m, 4.5% yield), as well as Victoria Avenue, Albert Park ($1.82m, 4.4% yield).
Amid the COVID-19 pandemic, CBRE’s Rorey James noted “there has been a noticeable increase in enquiry from retailers for open-air spaces.”
“This latest sale in Elsternwick is one of the strongest we’ve seen in the Melbourne market this year, and highlights the demand for strip retail properties,” Mr James said.
“Established retailers are seeing a change in customer behaviour due to social distancing measures and feel it could be a more permanent ‘lifestyle’ change. There is the view that this would see people continue to flock to open air shopping strips, as they have done during the past 5 weeks.”
“Spaces suited to essential services such as bottle shops, cafés and supermarkets have remained highly sought-after, but we’re now witnessing an uplift across other retail sectors.”
The sales accompany six recent leasing transactions, all for five years or longer, across St Kilda, South Yarra, Ormond, Hawthorn and Ivanhoe through CBRE.
In St Kilda, café Studio Beans opened on the corner of Inkerman and Barkly Streets in late-March, and reported a roaring trade from the outset, selling more than 500 coffees each day, primarily to local residents working from home.
CBRE Retail Leasing agent Jason Orenbuch notes the interest is coming from a variety of businesses.
“Confidence is coming back into suburban retail strips,” Mr Orenbuch said. “Our team has been fielding an increased volume of calls, including from established retailers looking to reset their retail networks in Melbourne’s inner suburbs.
“Major retailers are now looking for locations with easy access, where their customers can feel comfortable with social distancing measures within the store, and while entering and exiting.”
“More and more people are working from home – in arrangements that in many cases will continue – and reacquainting themselves with their community operators, including not just getting a coffee from their local café on the weekend.”
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CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.