Surf Coast development nets record Torquay sale in wake of Boardriders exit

Boutique fund manager IP Generation has sold its Surf Coast Social development at 27 Baines Cres, Torquay for $40.06m. The site was previously the Australian headquarters of Boardriders.

The redevelopment from global surf brand headquarters to successful mixed use project has delivered gold for boutique fund manager IP Generation after closing an off-market sale in Torquay.

Fitzroys director Paul Burns negotiated a $40.06m off-market deal for the former Boardriders HQ with a Melbourne-based private investor, cementing the biggest price for a commercial property on the Surf Coast.

Boardriders owns iconic surf brands such as Quiksilver, Roxy and Billabong.

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IP Generation acquired the 27 Baines Cres property from a group of local investors for more than $15m in 2019 and set about transforming it from corporate head office to a mixed use, multi-tenant development named Surf Coast Social.

The existing 6096sq m building is occupied by Sou’west Brewery, flexible workspace provider Workspace 365, The Great Ocean Road Coast and Parks Authority, a new entity The Bathhouse, that will collaborate with experienced beauty operator Little Company, and pilates and yoga fitness studio Core Plus.

The long-term leases were obviously considered gold for the suitors, with a very long weighted average lease expiry of 12 years.

IP Generation chief executive Chris Lock said the sale reflected the quality of the building, resulting from considerable capital investment, as well as growth in demand for high-grade commercial property on the Surf Coast.

“We identified value-add opportunities at 27 Baines Cres, consistent with our investment strategy, and are very pleased with the outcome of the sale,” Mr Lock said.

A pending rezoning of land on Baines Cres from Industrial 3 to Commercial as part of the Torquay-Jan Juc Retail and Employment Land Strategy creates an opportunity for the purchasers, Mr Burns said.

Sou’West Brewery is a key tenant at Surf Coast Social. Picture: Alan Barber

Head brewer Luke Scott at Sou’West Brewery. Picture: Alan Barber

Sou’West Brewery has opened up at the site of the old Quiksilver head office. Picture: Alan Barber

“This property is expected to be one of the preferred sites for any new major tenants seeking accommodation in Torquay,” he said.

“An indicative scheme for an additional building on the site has been prepared, the dearth of alternative sites and this properties location make it a prime target for new tenants.

“Torquay essentially has no meaningful vacancy, the property owner has received approaches from a variety of tenants seeking space, including typical office users.”

The buyer, with offshore origins, acquired the property on a 5.59 per cent yield.

Mr Burns said the property sold off-market but numerous bids were received, resulting in a competitive, private expressions of interest process.

“This is an outstanding long-term investment however it also has significant value-add upside via the potential development of an additional building on site,” he said.

It is on a 19,550sq m site that has parking for 202 cars, and has huge future potential.

“Torquay has a tightly confined commercial precinct which is experiencing unprecedented demand from the influx of ‘sea changers’ in response to Covid and flexible working arrangements,” Mr Burns said.

The Surf Coast was Australia’s seventh-fastest growing local government area, according to the 2021 Census data, with local forecasts tipping the population to add another 12,000 by 2036.

“Torquay is the largest settlement in the Surf Coast region, and commercial zoned land is almost fully occupied,” Mr Burns said.

“The purchaser recognised the excellent long-term rental prospects and potential of the site, and the ultra-rare opportunity to gain a foothold in one of Australia’s fastest-growing regions.”

“This was reflected in the momentum built up during the off-market campaign. This transformative period for the Surf Coast will continue to have a profound effect on commercial property market demand.”