Retail assets at Paris End of Melbourne’s CBD fetch $4.95 million at auction

Two corner retail assets at the Paris End of the Melbourne CBD have sold under the hammer to two separate foreign buyers last week, underpinning the demand for central-city trophy assets.

The ground and basement levels of 118 Russell Street are leased and fetched $4.95 million combined, according to Colliers International, which handled the auction campaign.

Award-winning bakery café Brioche By Philip occupies the ground-level tenancy of the iconic Fender Katsilidis-designed Hero building, while pilates and barre gym S3 Studio occupies the basement. 

The selling agents were Colliers International’s Oliver Hay, David Sia and Daniel Wolman.

“At the Paris End of the CBD on a highly visible corner, they are considered real trophy investments. It is becoming increasingly evident that the market is prepared to compromise on yield for the enjoyment and status of a premium CBD asset,” said Hay.

A Chinese investor won the basement level for $3.2 million, setting a record yield of 5.12 percent for basement strata retail assets in the city, according to a media release. 

The ground floor was secured by an offshore investor for $1.75 million resulting in a yield of 3.56 percent. 

Hay said both floors had high-quality fitouts, which would provide the buyers with long-term depreciation tax benefits.

“With the tenancies taking a combined rent total of $226,167 per annum, plus GST and outgoings, the return on investment is unquestionable,” he said.

Brioche By Philip, which has won awards for the best bakery and best sourdough bread in Melbourne, has committed to seven years while S3 Studio has signed a three-year lease, starting in 2015 with three further options to renew.

Sia said the location, within “a stone’s throw” of Melbourne landmarks like Chinatown, high-end Collins Street boutiques and popular bars and eateries, was the key selling point.