The sale of these four shops at 1 & 2 at 702 Calder Highway and 12A & 12C Kennedy Street, drew enormous pre-auction enquiry, a strong 50 plus crowd and four bidders.
December 5, Melbourne – The evolving market fundamentals of Melbourne’s suburban retail strips will underpin their survival in the face of new challenges including the looming threat from Amazon, according to Teska Carson.
Director George Takis, a veteran of 20 years in leasing and selling properties within some of Melbourne’s most successful strips, said Amazon would have little if any effect at all on strips, and may even have a positive impact.
“Much has been said and written about the devastating impact that Amazon will have on Australian retailing, but the real impact is not going to be on Chapel Street or Puckle Street or Burke Road, indeed it will strengthen quality strip retailing. It is the department stores and onliners like eBay that should be more concerned,’’ Mr Takis said.
He said the sale of four shops on the Calder Highway at Keilor for $3.3 million on a firm 4.8 per cent yield, among numerous other sales, continued to dispel observations that investor sentiment was cooling towards retail property.
“Amazon and retail sales data have drawn some predictably negative comment but savvy investors know that strip retail is a long term investment and one which holds a special place in Australia’s suburban social and cultural landscape.
“Strip retail has faced many challenges in the past including the rise of enclosed centres – which had been touted as the death knell for strips – but strips are still there, they rose to meet the challenge, they became smarter, more innovative, changed their offerings and survived and will continue to do so,’’ Mr Takis said.
The sale of the four shops at 1 & 2 at 702 Calder Highway and 12A & 12C Kennedy Street, which drew enormous pre-auction enquiry, a robust crowd and four bidders, follows a series of strong results for retail strip investment sales* across Melbourne including:
- 225a-228 Beach Road, Mordialloc, $3.42million, 1.6% yield, six bidders, $120k over reserve
- 352 Bay Street, Brighton, $1.75 million, 2.6% yield, eight bidders, $500k over reserve
- 468-470 Hampton Street, Hampton, $2.6 million, 3% yield
- 15 Centreway, Mount Waverley, $2.14million, 3.4% yield, six bidders
- Shop 4, 10 Church Street, Brighton, $2.26 million, 4.2% yield, five bidders
- 7/672 Glenferrie Road, Hawthorn, $1.9 million, 4.8% yield, five bidders, $400k over reserve
- 26-28 Station Road, Cheltenham, $2.07million, VP, sold $600k up on previous sale 12mths earlier
- 156-158 Tennyson Street, Elwood, $1.37 million, 5% yield, four bidders, $175k over reserve
*All Teska Carson sales since July 2017
Eager investors line the street prior to this 352 Bay Street, Brighton shop selling for $500k over reserve for $1.75 million on a tight 2.6% yield.
“These are results that unequivocally assert that strip retail has a strong future. Are all of these investors wrong or do the strong fundamentals that have traditionally underpinned strip retailing – including, importantly, Melbournites’ penchant for the street hubbub, the social connection, and alfresco dining – remain in place?’’
Mr Takis said unquestionably Melbourne’s retail strips were undergoing change but change that would continue to support them.
“Suburban strips are now going through an evolution driven by Melbourne’s massive population growth and the development of apartment buildings that have put a relatively new demographic and many more feet on urban shopping streets.
“As a result the mix of retailers has and is continuing to change. Years ago Bridge Road was the fashion king with local manufacturers the key. The gentrification of Richmond and more recent population growth put paid to that, but in the process we have seen the strip offering evolve to meet the challenge,’’ Mr Takis said.
He said the impact of the shift to online retailing had been overplayed and that trends to food and beverage and quality, service-related retailing, that was little affected by online sales, would ensure strip shopping’s survival.
Big name brands, he said, would also survive due to customers’ need to touch and feel, while quality and face to face service were things that online retailing could not match.
Five bidders pushed the price of this 7/672 Glenferrie Road, Hawthorn shop to $1.9 million – $400,000 over the vendor’s reserve.
“The diversity of the retail strip offering, the growth in food and beverage retailing and, to a lesser extent, service offerings including nail and hair salons, and the boutique nature of many of the small retailers, will still attract customers.
“Not everyone likes to buy clothes online, shopping for some is a pleasure that cannot be satisfied on a computer screen, indeed online sales have not had nearly the impact that had been forecast, some years back.
“That is not to say that strip retailers should ignore Amazon or any other like intrusion into the retail market, indeed any retailer would be remiss if they did not have plans to maintain and improve their position within the market,’’ Mr Takis said.