the facts

THE SMITH & LEICESTER HOLDINGS

411 - 421 SMITH STREET

FITZROY

Sold 411-421 Smith Street Fitzroy TCI - An in depth look behind the scenes of the campaign. We'll explain the pros, the cons, the challenges and the reveal!

THE PROS

Two street frontages
Would appeal to all sectors of the market i.e. developers, land bank buyers or investors
Security of rental income, with a national tenant and a well known tenant occupying the whole building
Ample on site car parks
32.5m frontage onto Smith Street
Located in the northern end of Smith Street, which is more ‘development friendly’ – with larger land parcels, minimal elevations in land and topographically, at the ‘lowest’ height point of Smith Street, allowing for better development height potential
Nearby completion of a development, with Dan Murphy’s as an anchor tenant
There was also a recent push into the southern end of Smith Street, from multiples of specialty and national food tenants

THE CONS

Leases required a further 5 year hold before any development could occur
Leases also utilised 1,000m² of land as parking
Property had known contamination, which was disclosed to all interested parties
Sensitive residential interface along the western boundary, reducing development potential
While there was a recent interest in Smith Street in general, this was wavering at the time of the sale

The Facts Sale The Smith Leicester Holdings 411-421 Smith Street Fitzroy Real Estate Fitzroy Development Fitzroy Retail Commercial Real Estate TCI

Sale The Smith & Leicester Holdings 411-421 Smith Street Fitzroy Real Estate Fitzroy Development Fitzroy Retail Commercial Real Estate TCI

THE CHALLENGES

Smith Street was beginning to lose it’s luster – the push from the food and lifestyle sector of the market was weakening caused a reduction in retail rental potential
The marketing focused on the potential of the surrounds, with future developments making up for the drop in retail rentals
Explaining and discussing the existing contamination with potential Purchasers. While contamination is manageable and in a large number of properties in the area, disclosing this meant there was a reason for Purchasers to reduce their price, loose interest completely or to get the wrong advice from a consultant
The price was considered ‘high’ by the general market. As noted above, the marketing focused on future growth
The medium term hold caused by the Leases meant a large number of developers lost interest, while the price was considered high by land bank owners

THE REVEAL

After a long campaign process, TCI sold the property for $16,000,000 – which equated to a 3.5% return or $8,900 per m²
Market expectation was circa a 4.5% return or $8,000 per m²
Final result being 29% above market expectations

the facts

THE SMITH & LEICESTER HOLDINGS

411 - 421 SMITH STREET

FITZROY

THE PROS

THE CONS

THE CHALLENGES

THE REVEAL

the facts

market expectation

return

return

higher

Campaign performance

PERCENTAGE

PER M²

percentage

RETURN

PER M²

RATE

market average

sold 411-421 Smith Street

sold 411-421 Smith Street

sold 411-421 Smith Street

sold 411-421 Smith Street

sold 411-421 Smith Street

sold 411-421 Smith Street

sold 411-421 Smith Street

sold 411-421 Smith Street

sold 411-421 Smith Street

sold 411-421 Smith Street

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