Investor pays record $3.2 million for Brighton Street bakery premises on 2.6% yield

The premises of Browns Bakery on Church Street in Brighton have sold to a local investor for a record $3.2 million at auction following a battle between seven bidders.

The final price for the 46a Church Street property represented a yield of just 2.6% with around 150 people in attendance at the on site auction.

It is believed this is the highest amount paid for a single-fronted property in the street, and may be the lowest sale yield achieved this year for a retail shop in Melbourne’s major shopping strips.

The property was offered for sale for the first time in over half a century, under instructions from executors, sold on behalf of the Ireland family who had owned it for around 50 years.

In October last year, the historic Lygon Street premises of Donati’s Fine Meats in Carlton sold for $2.89 million at auction, with a private investor paying nearly $1.4 million above pre-auction expectations for the trophy inner-Melbourne retail asset on a yield of around 2.3%.

The previous highest price paid on the retail strip was 93 Church Street, the premises of Rock Shop Clothing, which sold Mark Talbot for $2.99 million in September 2010 and included a separate first floor apartment.

Fitzroy's agent Mark Talbot handled the marketing campaigns of both properties.

The building stands on a 154 square metre site with total building area area of 179 square metres.

The property is leased to Browns Bakery on a three year deal with a further three-year term, currently returning $86,357 plus outgoings and GST.

Talbot says several shops of a comparable size within the immediate vicinity were currently returning rents circa $120,000 per annum plus outgoings and GST,which helped underpin the value of the offering.

“The recent sale confirms Church Street, Brighton as arguably the best, if not the best, retail strip in Melbourne,” says Talbot.

“To achieve a sale price reflecting a yield of only 2.6% shows that investors are willing to acquire prime property, even if the rent is below market rent.

“Earlier this year we saw the deli that adjoins the iconic Pantry sell for $2.9 million,returning $115,000 per annum, but to achieve $3.2 million for a shop only returning $86,000 demonstrates our ability to achieve a maximum sale result for our client.”