This article is from the Australian Property Journal archive
A private investor has bought an older style office warehouse building in Melbourne’s western suburb of Footscray West for $894,000, on a yield of 8.39%.
Selling agent Jones Lang LaSalle’s industrial negotiator Stuart Duncan said the property returns an income of $75,000 with a new three year lease with 2.5% per annum annual increases.
The older style building was originally constructed in around 1970 and extended in 1987.
The 1504 sqm building is zoned industrial one and sits on a 2109 sqm site.
Duncan said the sale represented a strong sale price for the area with the price equating to $424 sqm on the land area, which reflected the rarity of the offering and the premium paid for smaller holdings.
He added that outer west land value increases over the past 12 months have pushed inner west land over $200 per sqm for blocks up to 4,000 sqm as companies are keen to take advantage of the excellent road networks in the area.
“This was a rare offering in Footscray West that is traditionally an industrial area for major occupiers.
“However new infrastructure, aged facilities and lack of available land has seen occupiers move further west to Laverton North, Derrimut and Deer Park freeing up these opportunities.
“The market was dominated by transport and logistics companies with the Somerville Road precinct still a major container transport locality,” he added.
Property in the area is predominantly controlled by owner occupiers and private investors and there is little opportunity to buy new developments due to the shortage of land, with the last remaining sites to offer pre-lease opportunities including Central West Business Park and Geelong Road, Brooklyn.
Recently, two properties on 600 Geelong Road, Brooklyn and the Feltex Carpet site in Ashley Street – GBA 10,084 sqm was sold for $4.425 million.
“The area has mainly secondary accommodation which is reflected in the rentals with prime space leasing at $65 per sqm and secondary and $42 per sqm,” Duncan said.
By Adam Parsons
