Small office-warehouse in Melbourne's Eltham sells at 4% return

A tenanted industrial property in the Melbourne suburb of Eltham has sold for $582,000 on an indicative 4.4 percent return at auction.

The property at 6/38 Bridge Street is in a business precinct of Eltham with many of Australia’s major big box and branded traders located nearby.

Unit 6 is one of nine boutique showroom-warehouse buildings in a strata-titled development located on the corner of Bridge and Susan Streets, said selling agent Gray Johnson's Scott Ashby. 

Smaller commercial property investments that meet the needs of a private investor or a smaller superannuation fund are well sought in the auction market, according to the selling agent.

The unit has a building area of 230 sqm and is part-showroom and reception area, with a warehouse space at the back.

The tenant, a Pack & Send franchisee, has occupied the property for some years, and currently holds a three-year lease with a passing annual rental of $26,100. There is the option to renew the lease for another three years.

All the usual outgoings are met by the tenant and there are annual rental increases fixed at the CPI plus one percent, so future rental income growth will flow to the purchaser.

“With prominent exposure, a position in a vital commercial precinct of Eltham’s main business area, with a sound lease covenant, I was anticipating interest at auction would see a sale price in excess of the reserve,” Ashby said.