A hole-in-the-wall coffee shop in the heart of Sydney’s CBD has sold for $1.57 million in an auction that fell just short of setting a new price record for the city.
Four bidders tussled for the keys to the 14-square-metre property at 1/37 York Street – opposite Wynyard Park – which was for sale for the first time in more than 30 years and came with no seating.
The price translates to a per-square rate of $112,143, just shy of what is believed to be Sydney’s record rate of $113,600 – and a yield of 5.63 per cent. The price was also just shy of the median house price in the inner-west suburb of Annandale, at $1.58 million, according to Domain Group data.
The current price-per-square metre record was set by the $2.16 million sale of a 19-square-metre retail property, also occupied by a cafe, at shop 2/70 Pitt Street, in 2015.
The buyer, a Sydney local who wished to remain anonymous, said that the property was his first commercial investment and that he had been expecting to be outbid.
“I’ve had some residential investment and I’ve had some shares and I was keen to diversify my portfolio. It’s my first commercial investment,” he said, adding that as a city worker he had witnessed the amount of foot traffic the shop received.
“The location had significant appeal in terms of exposure, meaning it’s easy to attract good tenants – not to mention the capital growth that comes along those lines.”
The property is leased to Normcore Coffee on a five-year lease, currently returning $92,000 gross per annum, with a five-year option and 4 per cent annual increases – a fact the buyer also said helped convince him to keep bidding.
The property had been held for more than 30 years by a family and was part of a portfolio of properties they had amassed to house the juice shop chain they used to run.
Savills agent Nick Lower, who sold the property with Selin Ince, said that they received 120 inquiries during the campaign, with 20 contracts issued to prospective buyers.
Interest had come from “local, national and international” buyers, said Mr Lower, with first-time investors and buyers looking to add the asset to their self-managed super fund making up a good portion of these.
“This entry level asset, there just isn’t too many of them. It’s not often you can rock up to the Sydney CBD with less than $2 million and expect to get something,” he said.
“We like to say that you’re getting the postcode of Sydney without the price tag,” he added.
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