Development upside brings plenty of interest
The immense development upside of a prime Bendigo retail site is expected to see both developers and investors come calling when the property is put to auction this month.
The shop at 123-127 High St (Midland Highway) in Kangaroo Flat features a brand new five-year lease to a florist and gift shop, with options to 2030 and exceptionally rare 5% annual rent increases.
But it is the large tract of land at the rear of the building that could most excite the market, with much of the substantial 899sqm site currently undeveloped.
Zoned as Commercial 1, the property returns $39,618 per annum plus GST and is expected to sell in the $600,000 range when it is put on the block at Burgess Rawson’s Investment Portfolio Auction on Wednesday, February 24.
However, with the opportunity to develop and expand on the land – subject to council approval – in a precinct dominated by major retailers, selling agent Zomart He said the property has potential for future expansion and upside.
“The site is significant at 899sqm, with the huge block of vacant land at the rear, which has the potential for a future expansion,” Mr He said
Mr He pointed to the surrounding retailers as a key pillar on which the property’s long-term success had been built.
“The tenant is quite experienced – they’ve been in business for 30 years,” he said.
“The property sits within a highly sought-after and tightly-held large format retail precinct. There’s very low vacancy on the strip, with tenants including McDonald’s, Aldi, Chemist Warehouse, BP, Subway, Cellarbrations and Bunnings Warehouse.”
The property’s unique lease structure also plays into the buyer’s hands, with rent increases well above most properties on the commercial market.
“Annual rent increases are at 5%, which is very unusual. Often, we see 3-4%, but almost never 5%, so there’s substantial rental growth to enjoy in the immediate future,” Mr He said.
The successful buyer will also receive 50% stamp duty savings, as well as a foothold in Bendigo, which is forecast to grow to more than 155,000 residents over the next 15 years.
Burgess Rawson’s first Investment Portfolio Auction of 2021 will be held at Crown Casino from 11am AEDT on Wednesday, February 24.