No investor appetite for premises of Melbourne laneway café Oli & Levi despite revival in food-sector leases in CBD

The premises of popular Melbourne café Oli & Levi at the end of the Coromandel Place laneway in the Melbourne CBD failed to attract any bids at auction yesterday.

Try as he might auctioneer David Scholes could not extract any bids from a room packed with potential investors attending the Burgess Rawson portfolio auction at Melbourne’s Crown Casino.

The 40-square-metre café was expected to sell at auction around the $570,000 mark (a yield of around 7.4%), with Scholes trying to cajole investors by telling them the café served “300 cups of coffee before lunch”.

However there was no interest at $500,000, $480,000 or $450,000, and the cafe premises was passed in on a vendor bid of $550,000.

Buyers might have held off in the hopes of negotiating a cheaper purchase price post-auction given the café was advertised with tag line "immediate sale required" and had received expressions of interest prior to auction.

It was marketed by Jamie Perlinger and Raoul Holderhead of Burgess Rawson.

The café at 20 Coromandel Place on the ground floor of the Coromandel apartment block pays rent of around $40,600. It is open from Monday to Friday for breakfast and lunch, and Property Observer can attest that the cappuccino ($3.50) and rhubarb tart ($1.50) are well worth a visit.

Coromandel Place is a dead-end laneway that runs off Little Collins Street in between Exhibition and Russell streets.

The café is surrounded by warehouse-style apartments, and there are currently no other retail or eateries in the laneway with the shop next door vacant.

The 90-apartment Coromandel Place tower was completed in 2011 featuring one- and two-bedroom apartments measuring between 47 square metres and 51 square metres, with most owned by investors.

It is noticeable for featuring moveable internal walls. It was developed by VICLAND Corporation and designed by Bruce Henderson Architects.

A one-bedroom apartment in the complex can be bought for around $390,000.

An August 2012 retail survey by Savills finding that food services retailers are bolstering Melbourne CBD’s retail leasing market.

Savills' Spotlight on Melbourne CBD Retail survey found the retail vacancy rate as of August 2012 to be just 5.1%, almost unchanged from nearly three years ago despite “the much-discussed retail sector turmoil”.

Report author and Savills Victorian head of research Glenn Lampard says the research demonstrates that an apparent downturn in retailing is not reflected in vacancy data but confined to particular sectors of the market, including those facing the increased competition that internet retailing had produced.

“What we are seeing is a re-organisation of the deckchairs with department stores, big box retailers, and those stores appealing to the discretionary spend, especially fashion, declining in number while food and beverage retailers are taking up the slack,’’ he says.

Savills’ retail directors Michael Di Carlo and Jeremy Marmur say the amount of activity in the leasing market also revealed evidence of an evolution in CBD tenancy mix.

“We’ve done 20% more deals in the period January to August than we did over the same period in 2011," says Di Carlo. 

“What that says is firstly, that the retail market is a lot less sluggish than the headlines would suggest, but with a significant number of those new deals falling to food and beverage retailers, there is now underway a trend towards a real change in CBD tenancy mix,’’ says Buckhurst Street.

Recent leases signed by food sector retailers in the Melbourne CBD include South Melbourne takeaway icon South Melbourne Market Dim Sims, which signed its first CBD lease at 26 Elizabeth Street.

Well-known Melbourne restaurateur and chef Marco Santucci agreed terms on a new 400-square-metre lease at 31 Flinders Lane, and a long-standing Hawthorn café has taken a Hardware Lane lease.