Rosebud SMSF investor reads tea leaves to snap up Geelong retail spot for $340,000

An investor has paid $340,000 at auction for a two-level brick retail building on three titles on Ryrie Street, a Geelong café and speciality retail strip surrounded by medical and professional services premises.

The price was exclusive of GST.

The investor, who hails from Rosebud on the Mornington Peninsula, will acquire some of the property via his self-managed super fund.

The property measures 184 square metres with two shops on the ground floor, one of which is occupied by tea leaf retailer Leaf Tea, with the other ground-floor shop currently vacant and a pedestrian thoroughfare running to a public car park at the rear.

The second-floor premises run across the two shops and thoroughfare and is also vacant. It was previously tenanted by a dental surgery.

Leaf Tea pays $12,469 per year and is on a four-year lease, which commenced in January, with renewal options.

Fully leased, it is estimated the premises would return a gross yield of around 8%.

The property was marketed by Tim Darcy and Simon Jarman of Darcy Jarman real estate in Geelong.

Tim Darcy tells Property Observer there was “solid enquiry during the marketing campaign”, with most interested parties being investors looking to value add.

“The retail investment market in Geelong is currently strong. Well leased and located properties can produce yields in the range of 6% to 7.5%,” he says.

The site was marketed with development potential, with the investment report indicating that concept plans and sketches have been prepared relating to a potential upgrade of the property.

They propose turning the first floor into student accommodation and turning the vacant ground-floor shop into a café.

The investor memorandum says the City of Greater Geelong is supportive of the proposed upgrade and proposed uses.

Ryrie Street is the major East West Link through central Geelong providing connection to the Bellarine Peninsula to the east and Geelong Bypass Road to the west.

It is surrounded by strong service, medical, and office related businesses, including St John of God Hospital, many real estate offices, Harwood Andrews Lawyers, City of Greater Geelong, Barwon Water and many other private medicos, solicitors and accountants.

The pedestrian-friendly area also includes plenty of cafes complemented with specialty retailers.