Buyers look smart
YOU can’t make a silk purse out of a sow’s ear, apparently, but you can do well upgrading some of Townsville’s older, unloved commercial properties.
Particularly so if it is accessible and has good parking, which the old set of shops in 208 Charters Towers Rd, Hermit Park, has in good measure.
Troy Townsend of Ray White Commercial Townsville has just sold this fully leased site for $ 2.12 million to a Newcastle investor.
With a net rent of just over $ 200,000 per annum, the deal shows a return of 9.5 per cent.
Mr Townsend said that yield was almost double the returns being achieved in the hot markets of southern capitals and was a key reason investors were looking to regional centres like Townsville.
“A big positive for this site was that 80 per cent of the building is leased for a minimum of five years. It has a very strong WALE ( weighted average lease expiry), one that many people go out looking to spot,” Mr Townsend said. But it wasn’t always so. The property languished mostly vacant for several years before a buyer picked it up last year for $ 1.25 million and through a makeover and fitout incentives, believed to have cost around $ 650,000, attracted two new tenants for much of its floorspace.
“It was 80 per cent vacant when the ( previous) owner took it over. They managed to secure two new quality tenants through fitout incentives and a facelift of the building,” Mr Townsend said.
The property has a gross floor area 860sq m on a 2007sq m site with 26 on- site car parks.
It is one of several sites in Charters Towers Rd which have been given a new lease of life in recent years as mostly owner- occupiers – accountants, financial planners and business services firms – have taken the opportunity to buy their own site and invest in a makeover.
Mr Townsend believed buyers had opted for Charters Towers Rd over a CBD location because parking was easier and the sites were more accessible.
However, while there were still plenty of properties available for lease in Charters Towers Rd, there was very little for sale, he said.
“We are desperately short of good quality investment stock. Southern- based investors are very interested in Townsville and especially want multi- tenant highyielding properties,” Mr Townsend said.
“Anything 8 per cent plus selling really well.”
Meanwhile, providing a good fitout remained a big incentive to attract tenants.
“( Tenants) may not have the time to co- ordinate a fitout and sometimes they don’t have the money. If you are astute, you can do ( a building makeover) economically.” is