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Commercial Sector Reacts to Land Tax and Confidence Challenges


The Commercial market has experienced a cautious approach to both leasing and sales transactions in the last quarter.

The recent succession of interest rate hikes coupled with substantial Consumer Price Index (CPI) figures has dampened the confidence of numerous businesses, leading them to hesitate in pursuing their expansion plans or investments in additional sites that were previously on the agenda over the past 12-18 months following the COVID pandemic.

Land Tax continues to be a genuine trigger point for some investors who are revaluating the necessity of holding all properties in their portfolio. We anticipate a number of property owners deciding to sell and realise some of these assets in the next 6-12 months taking into account each owner's individual circumstances and position.

In respect to the industrial sector, solid investment propositions have continued to be keenly pursued, albeit with a much more measured approach in the past six months.

Miles sold 140-142 Northern Road, Heidelberg West recently at auction attracting five active bidders. A renewed 5-year lease to an international tenant, returning $180k plus all out-goings including Land Tax, reflecting a 5% yield, culminating in a sale price of $3.6 million.

A corner site at 740 Plenty Road, Reservoir was successfully sold at auction for $1.190 million. The property, which had served as an owner-operated panel beater business for the past 70 years, garnered substantial interest from owner-occupiers looking to acquire it. 

From a retail aspect, 139 Main Street, Greensborough was recently sold post-auction for $770,000. The buyer, an investor, had already arranged a tenant to lease the site.

We have also successfully negotiated a new 7-year lease with Specsavers on Main Road, Eltham at a very favourable rental agreement, reinforcing the emergence of national tenants re-visiting key sites in prominent retail strips, rather than solely focussing on the key shopping centre locations.

We are offering a very attractive development site for sale at 184 Barkly, Street Kilda through an Expression of Interest (EOI) campaign in August. This property features an existing two-level retail/office building situated on a generous land area of 637 square meters, making it an attractive proposition for developers, especially given its location in a Commercial 1 zone. We anticipated a sale price of around $3 million. 

A brick warehouse located at 20 Terra Cotta Drive, Blackburn will be coming to market in early August, and we have already received significant early interest. With these strong early enquiries, we anticipate a sale price range of $1.7 to $1.8 million for this property.

If you haven't already subscribed to our regular email featuring new campaigns and recent results, please let us know, and we will ensure you stay updated on the evolving market trends during these very interesting times in the commercial, retail and industrial sphere as well as our market observations.

As always, please don’t hesitate to contact one of our team at any stage to discuss your real estate requirements, whether they be management, an updated estimate of sale or review of rent in the current market.

Thanks for reading.


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