‘Extraordinary’ appetite for commercial real estate as reserves flayed

Melbourne-based Teska Carson said the appetite for commercial property among yield-hungry private investors has destroyed auction reserves for everything from empty reception centers to telecommunications towers.

The trading agency said 400 people had participated in five of their most recent auctions, with an average of six bidders paying an average of more than $ 450,000 in reserve at each auction to secure property under the hammer.

The successful bidder paid more than double the reserve price in two auctions: an empty reception center in Albion was sold for $ 1.91 million – $ 1 million above its reserve, while a telecommunications tower in Footscray sold for $ 990,000 a return of 7 percent after the reserve was sold was set at $ 490,000.

“A mixture of surprisingly good economic news, the apparent containment of COVID-19, low interest rates and better returns than almost anywhere else is behind a remarkable rebound,” said George Takis, director of Teska Carson.

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“This time last year we were at a very low level and it was difficult to find a way out. Now we are inundated with inquiries for pretty much every property we list, with heavy crowds and multiple bidders. It’s just extraordinary. “

In the latest deal, five bidders from a lot of 80 raised the price of a retail property in Balwyn to $ 2.08 million – more than $ 400,000 above reserve and at a land price of $ 9,412 per square meter.

It was eventually sold by Mr. Takis and colleague Travis Keenan with a return of only 2.6 percent.

Located in the Balwyn Shopping Village, the 306 Whitehorse Road Hotel is a 139 square meter two story building including an 88 square meter store on the ground floor, a large courtyard and a one bedroom apartment on the first floor.

The company was sold to Paws Up Cafe in October 2020 for a term of five years and made $ 54,000 net annually on a 3 percent annual increase.

Last week, a Sydney buyer flew to Melbourne to bid six others buy the communications tower on Whitehall Street in Footscray, Keenan said.

In another successful sale by the same agency, a 250-square-foot store at 481-483 Warrigal Road in Ashwood, Melbourne’s eastern suburbs, sold for $ 2.16 million on a return of 2.56 percent.

It sold $ 250,000 over the reserve.

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