A large office and warehouse complex in the inner-west suburb of Leichhardt, owned by national retailer Best & Less, is on the market with price expectations of more than $25 million.
The 6200-square-metre site is being offered with a sale-and-leaseback arrangement to Best & Less for a three-year term, plus additional three-year option, with the company to pay an annual net rent of $1.3 million for the site, which is currently being used as its national headquarters.
The retailer relocated operations to 657-673 Parramatta Road in 1997 and has subsequently added surrounding blocks to its land parcel. The site now spans two sides of Upward Street and has significant frontage to Parramatta Road.
The area surrounding the site has been a hotbed of apartment development in recent years and Best & Less has fielded several off-market approaches to buy the property, according to listing agent Matthew Meynell of Colliers International.
“The interest is not surprising considering the rare site envelope, substantial existing improvements and burgeoning commercial office market. Prospective buyers would also be aware of the proposed rezoning and surrounding developments such as Greenlands Leichhardt Green, which sits directly behind the subject property and yielded 267 apartments, and Mars Group’s Oasis, which yielded 119 apartments,” Mr Meynell said.
The site is subject to proposed rezoning which, if granted, would see it become B4 mixed use, with a 2.4:1 floor-space ratio (FSR) and 21-metre height limit that would make it attractive to residential developers.
But Colliers’ James Cowan, who shares the listing with Mr Meynell, said the chances of the site being sold to a developer were “50-50”, as investors were also scouting for such properties, owing to the current low-interest rate environment and the ability to quickly reset rents once Best & Less’s leaseback term ended.
“The core office component of the site is currently around $250 a square metre and it could be reset to $300 or more,” Mr Cowan said, adding that the office had undergone significant renovations and an extension in the past 10 years.
Those renovations saw the property rated as a 5-star NABERS building.
In addition to the commercial office headquarters, within this collection are two warehouses, one separately leased, and an open-air sealed car park for 65 cars.
Mr Cowan would not comment on Best & Less’s plans beyond their leaseback period but said current demand from investors had seen many long-held properties put on the market.
“With three interest rate cuts through 2019 and associated pent-up investment demand, we’re finding long-term landowners are increasingly looking to unlock existing assets to capture market buoyancy and reinvest this capital into bigger and better things,” he said, advising that the property was expected to fetch north of $25 million based on recent sales results in the area.
Colliers recently sold a 13,684-square-metre industrial site with future development upside at 247 King Street, Mascot, for $48 million, as well as a large-format retail centre at 300 Parramatta Road, Auburn, for $45 million.
The Leichhardt property, at 657-673 Parramatta Road, is for sale by expressions of interest closing in the first week of March.
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