Newtown: Home to Pako bakery rises $100K above price hopes
3/350 Pakington St, Newtown, sold for $1.2m prior to auction.
The home to a popular bakery on Newtown’s river end of Pakington St has sold $100,000 above the range prior to auction.
The $1.2m sale to a local investor cemented a 3.25 per cent yield for the 95sq m shop at 3/350 Pakington St, which Gartland, Geelong agent Michael De Stefano said showed the demand for good properties in good locations.
“To get a 3 per cent return, even though we’ve had quite a bit of movement in interest rates, that’s what we were getting in those locations pre-interest rate rises.
“It shows the demand or good locations and the confidence in the Geelong market is still very good.”
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The longstanding tenant, Pakington Bakery, holds a five-year lease with a five-year option to the commercial property, paying more than $39,000 a year, plus outgoings. It had been listed with $1m to $1.1m price hopes.
While there has been some development around the periphery of the village, Pakington St remained a tightly-held location.
“Not a lot comes up that end of Pako and the inquiry was good but that was an offer that was $100,000 over the top range,” Mr De Stefano said.
“If it was to go to auction, at that level it would have been a fair bit of where we would have set the reserve, so that’s why we accepted the offer.
3/350 Pakington St, Newtown, sold for $1.2m prior to auction.
3/350 Pakington St, Newtown, sold for $1.2m prior to auction.
“Someone saw good value and as willing to put a very strong offer on the table to try and take it off the market.”
The sale comes as more investors seek to diversify their holdings in the wake changes to the Residential Tenancies Act setting minimum standards for rental homes.
“The days of parking something that you were going to develop down the track that may have needed some work but you were charging cheaper rent, you can’t do that now because of these new minimum standards.
“This new program has come in place where landlords are faced with spending quite considerable money just to get it to a minimum leasing standard.”
Mr De Stefano said commercial properties generally created higher returns and tenants paid outgoings, such as rates.
7/321 Pakington St, Newtown, goes to auction on August 26.
7/321 Pakington St, Newtown, goes to auction on August 26.
“There are higher risks at times. I’m loathe to use the term recession-proof Pakington St, but you see the low vacancy rates that it has had for a sustained period of time compared to pockets of the CBD,” he said.
“That’s why people are prepared to end up with an investment at 3 per cent, they know that if there is a tenant changeover they are going to get a tenant.”
Another tenanted investment property will be offered at auction on Friday nearby at 7/321 Pakington St.
The 86sq m commercial property is leased to Nova Balinese Kitchen, which generates a rental income of $42,000 a year and holds a new three-year lease to 2028.
