ou have been asked by a client to determine a purchase price for a brand new, air conditioned, retail showroom fitted out to a medium quality standard, situated on a main road with reasonable exposure and access, and parking at rear for 15 cars.
The property is currently vacant, but the agent has a firm offer to lease the property on a 5 + 5 year lease to a well-established local company providing the proposed rental is within market parameters.
The building has a nett lettable area (NLA) of 600 square metres and outgoings are estimated to be $36,000 per annum.
Market Evidence
Sale 1 The property is a five-year-old standalone retail showroom comprising 400 square metres of nett lettable area currently leased at $120,000 per annum with tenant responsible for all out goings, currently running at $18,000 per annum. The tenant is a national company and at the time of sale had just taken up the first renewal option on a 5 + 5 + 5 year lease.
The building was erected for the tenant’s requirements but is of an adaptable design and construction and considered the highest and best use of the site.
The premises are air conditioned, and have showroom lighting, ceilings and vinyl floor coverings.
The premises are situated on a main road on a corner site with very good exposure to a high traffic volume and easy access to at grade car parking at the front for 10 vehicles.
The property sold one year ago for $1,700,000 and the market has strengthened slightly since.
Sale 2 Ten-year-old brick retail shop / showroom of 250 square metres, with parking at rear for 20 vehicles. Situated on main road but is long and narrow being an inside shop in block of four similar shops.
The shop is currently leased on a 3 + 3 year lease to local trader with 12 months remaining on initial lease term. Tenant appears to be trading well. The current rent is $62,800 per annum plus outgoings (approximately $10,000 per annum). Tenant is responsible for outgoings.
The property sold very recently for $780,000.
Sale 3 A 30-year-old retail brick and iron industrial building that was partially upgraded for retail / showroom use approximately 10 years ago but is now in need of cosmetic attention. The property is not air conditioned, and the front half (50%) only is ceiled. Remainder is more warehouse style.
Leased on a 3 + 3 year lease to local trader, currently in option period which expires in 18 months.
Current rental is $100,000 per annum and the landlord is responsible for outgoings at $17,500 per annum with an NLA of 500 square metres.
The property is situated in a secondary trading location with limited exposure and no off street car parking.
The property sold recently for $1,100,000.
Sale 4 A two-year-old bulky goods centre with six tenancies each with an NLA of 200 square metres (except Lot 6). All tenancies are air conditioned, ceiled, average quality space.
At date of sale, Units 1 to 5 were leased on varying terms from 3 to 10 years with options to nationally franchised traders at rentals of between $55,000 and $60,000 per annum (average $57,500 per annum).
The property is situated on a main road with good exposure and shared car park for 40 vehicles.
Shop 6 has a larger area of 450 square metres with a slightly awkward floor plan and has exposure that is inferior to Shops 1 to 5. Shop 6 was vacant at the date of sale, with an asking rent of $125,000 per annum plus outgoings of $20,250 per annum. Enquiries with agent indicated it had been originally leased at this figure but the tenant only lasted 18 months before breaking the lease. The shop has been vacant for the last six months.
The property sold for $5,400,000 four months ago.
