The former Kodak building and Carlton & United Breweries headquarters in Abbotsford is set for a new chapter as a self-storage facility after being sold for $19 million.
Fitzroys’ Paul Burns and Chris James sold the 2-6 Southampton Crescent, 36 Bond Street and 27-29 Duke Street property, totalling 3,099sqm of land opposite Carlton & United Breweries’ famous Yarra River brewery, on behalf of developer Hengyi.
The offering comprises the part-refurbished distinctive curved office/laboratory building at 2-6 Southampton Crescent with 6,048sqm of net lettable area (NLA), originally built in 1928 for Kodak. It is currently 28% leased to ASX-listed Starpharma, which recently exercised its five-year option. Gross passing income from the property is $840,000 and there is considerable upside from this level.
The new owner is a self-storage operator with other facilities in Melbourne, and they intend to reposition the Southampton Crescent building into a self-storage facility.
“This location presented a unique opportunity for our construction and property development division,” said Gayle Sachs, Director of the new owners Howzit My China Pty Ltd.
The sale includes the adjoining Duke and Bond Street land, currently with warehouses leased on short and medium-term deals. This parcel of land has an approved permit for an additional 5,107sqm, nine-level commercial building with 129 parking spaces. The new owners intend to build within the town planning approval to create a state-of-the-art self- storage facility.
“The owners have been looking for a suitable building in the Abbotsford area to expand their self-storage operations for some time now. The existing building is a simple conversion to self-storage, and the approved Town Planning Permit enables a ramp-up to 500 storage units really quickly. With approvals in place and ready to go, this facility and the land next door will expand to 1,200 units in no time,” said Storcad Director and specialist self-storage designer Javier Rezzonico, who is involved with the project.
“We are pleased to have agreed to an unconditional contract of sale for the property. The project did not fit with our existing business model of mixed-use residential-focused projects; however, we look forward to seeing the new owner redevelop the site in the future,” said Hengyi General Manager, Simon Manley.
Burns said, “Changes in living and working preferences accelerated by the pandemic have prompted consistent increases in fee rates and revenue growth in self-storage facilities in recent years. Listed and private self-storage players continue to record strong sets of numbers amid an ongoing imbalance between supply and demand.
“Abbotsford and the surrounding inner-Melbourne suburbs have a large and growing number of medium and high-density dwellings that are conducive to requiring self-storage options nearby, making this an opportune repositioning play.”
“Particularly at a time of flexible working arrangements, more and more Melburnians are looking to live in inner suburbs with high accessibility and quality lifestyle amenity.
Developers such as Salta, Hamton, Icon and Pace have all recently completed residential projects in rapidly gentrifying Abbotsford, and development in neighboring locations such as Collingwood, Richmond and Fitzroy is continuing apace.
“The elevated demand for self-storage facilities in the area is very likely to increase in the coming years.”
“As a location, Abbotsford is one of Melbourne’s last city fringe suburbs with genuine unrealised development potential, and this offered a rare, ready-to-go development opportunity.”
James said the property also attracted strong attention from investors and value-add players.
“A number of buyers were looking to capitalise on the growing demand from office users seeking affordable, city fringe accommodation, compared to heated commercial markets such as Richmond and Cremorne. Buyers are confident demand for this type of accommodation will continue rebounding as cost-conscious tenants seek accommodation with flexible floor plates.”