Melbourne bars sell as market reviews work in tenants’ favour
The leasehold for Balaclava’s Ms. Carlisles has sold for $190,000.
Market reviews of Melbourne bar rents are benefiting our hospo haunts as the flow-on from empty venues in the wake of Covid-19 lockdowns continues.
CRE Brokers agent Lloyd Nunn said reviews of local rents conducted under lease agreements were resulting in rents “dropping dramatically”.
“You’re talking 40 per cent if you look at The Bar on Brunswick St, the rent there was $1600 a week and it came down to $944 on market review,” Mr Nunn said.
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The leasehold for 56 Bricks sold for $200,000.
Palm Royale changed hands for $125,000.
This was being driven by landlords of vacant premises having to significantly reduce their asking figures to secure a tenant, in turn bringing down an area’s average rent.
“For the landlord, the last thing they want is a market review because their rents are going to be slashed and if you’re mortgaged on the old value things are going to hurt,” Mr Nunn said.
“But what these rent reviews are doing is bringing rents down to a manageable amount for a viable business, because rents really should not be more than 10 per cent of turnover.”
Independent market reviews are conducted at specified intervals during a lease, commonly every three to five years and when there is an option to renew.
“They’re just starting to happen now,” Mr Nunn said.
“It used to be the last thing you wanted as a tenant because rents were high, but now it’s in tenants’ interest because their rent will probably go down.”
The Belgrave Hotel has sold after three years, for $330,000.
It’s been recently refurbished.
A neat modern watering hole.
Mr Nunn noted a shortage of “good stock” on the market: venues with good rent, in good condition and a good location on the main streets “like Brunswick St, like Sydney Rd”.
Leaseholds for Ms. Carlisles in Balaclava ($190,000), 56 Bricks on Chapel St ($200,000), Palm Royale in Richmond ($125,000), Heroes (CBD rooftop, $150,000) and John Doe on Chapel St ($40,000) have been sold recently by Mr Nunn, who runs Bar Sales Melbourne.
He also sold The Belgrave Hotel’s leasehold for $330,000.
“The new owners will keep it as it is,” he said of the Dandenong Ranges pub.
“It’s had a really good refurbishment because of the (Covid hospitality) grants and it looked in absolutely excellent condition.”
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