We recently received approval from Heritage Victoria for the proposed subdivision into 12 allotments. This approval was conditional on four conditions, three of which were painting (some of which we were already intending to do). The fourth point related to some patching of some rendering on certain chimneys. Our consultants Lovell Chen advise us this is a very good outcome.
As prefaced in the last update, we now have the majority of approvals required for the subdivision from the various Authorities, which is very pleasing.
The painting will require specialist resources as it includes the extensive verandah and restoration of the painted façade above the Bendigo Bank. We are sourcing quotes at present. The large number of power lines along the Clarendon Street frontage make it a more complex job as we need to deal with CitiPower, Yarra Trams and of course Council.
RETAIL STRIP MARKET
Terraplex continues to closely monitor the retail market in similar established shopping strips. The market remains very strong with yields regularly ranging in the 3.0% to 4.00% band.
There was a very encouraging sale at 278 Clarendon Street in April. The shop was leased to hamburger franchise Grilled and sold for $3.36m which reflected an initial yield of 3.4%. Another sale in May at 182-188 Clarendon Street was a standout result with an owner occupier paying $5.985m for a retail showroom. It was $2m over the reserve price.
CBRE are auctioning a retail shop at 268 Park Street which is very close to our property. There was some very interesting information in their marketing material which we thought we would share with investors:
• Population growth throughout South Melbourne is being driven by a number of small to medium size boutique developments. There are around 800 apartments under construction in the immediate area which will lead to an increase in the area’s population leading to higher foot traffic and larger retail spend.
• South Melbourne residential house prices have grown by an average of 19.65% per annum since 2013.
• 40% of South Melbourne’s population is aged between 20-39 with significant discretionary income to spend on food and fashion.
A summary of key demographic indicators in the area as noted by CBRE are outlined below: