An industrial unit in Melbourne’s north has sold to an owner-occupier who very nearly didn’t inspect it at all after the marketing photos convinced them the property was too small for their needs.
Gray Johnson agent Anthony Boldrini has sold Unit 4, 39 Heyington Avenue, Thomastown, for $1.31 million plus GST, with the deal wrapped up within 60 days of listing. The purchaser is an owner-occupier business, buying from a vendor who had themselves owner-occupied the unit before moving to a larger site.
The roughly 10-year-old unit is one of five in a boutique development within a modern industrial estate, with access to High Street at one end and connections through to the M80, Dalton Road and Settlement Road. A drive-through configuration allowing larger trucks and rigs to enter one side and exit the other when unloading proved a particular drawcard.
But the sale almost didn’t happen with these buyers at all.
The eventual purchasers were under real time pressure. Their lease at their existing premises was not being renewed, leaving them roughly three months to secure a new home for their business. They inquired on the Thomastown unit early in the campaign then didn’t take up Boldrini’s invitation to inspect.
The reason, it later emerged, came down to the photos. One image showed a mezzanine storage area installed by the previous occupant, and the buyers assumed it formed part of the quoted floor measurements leading them to conclude the property was smaller than it was.
“We hadn’t made any representations on the mezzanine,” Boldrini explains. Because the agency couldn’t verify whether it had been installed with permits, it was neither priced in nor included in the measurements and some buyers might use it, others might simply rip it out and install racking.
The turning point came when a lowball offer landed from an investor. Rather than push that offer, Boldrini went back around every party who had inquired, letting them know there was now interest on the table. This time the time-pressed business came through the door and their reaction said it all.
“They said, ‘Geez, I don’t know how we missed this one, it ticks most of our boxes,'” Boldrini recalls. They made an offer the same day as the inspection and agreed to a 60-day settlement, getting them into their new premises well inside their deadline.
For Boldrini, the lesson for buyers is simple: if a property is even close to your brief, inspect it. Photos can mislead in both directions and in this case, an image very nearly cost a motivated buyer the right property.
The sale also highlights a broader shift Boldrini is seeing across this bracket of the industrial market with vacant stock is increasingly the domain of owner-occupiers, not investors.
Of the interest generated during the campaign, the overwhelming majority came from owner-occupiers, with only two or three groups looking at the unit through an investment lens and ultimately deciding it wasn’t the right asset for them.
The reason comes down to yield. Investors in this space are chasing returns of around 5.5 to 6 per cent, Boldrini says, which is difficult to underwrite on a property with no tenant in place. Price a vacant unit to meet those yield expectations and the numbers simply don’t work for investors but that same dynamic pulls values back to a level where owner-occupiers can compete.
“Being vacant, it was quite accessible for owner-occupiers,” he says. Many are small businesses that are cashed up and have been watching pricing become more realistic. For those who have spent years paying rent, the maths is increasingly compelling. “They’re basically saying: we don’t need to pay the rent anymore it’s time to be our own landlords.”
It’s a window of advantage that cuts against the usual pecking order in commercial property. When investors step back from untenanted stock, owner-occupiers, often outbid in a tenanted, yield-driven market suddenly find themselves first in line for well-located, good-quality assets at prices that stack up.
For one Melbourne business with a lease running out and three months on the clock, that window, plus one well-timed phone call, made all the difference.
