Hot property: Pod capsule hostel in CBD deal; childcare centre sold and fund swoops on warehouse

A capsule hostel operator has secured a prime Brisbane CBD property and has revealed plans to open a 250-bed facility.

Tequila Sunrise Hostels will open its Brisbane operation with 250 Japanese capsule style beds, at 428 George St by the end of 2024.

An international hostel operator – which specialises in Japanese capsule style beds - has secured the leasehold of its fourth property in Australia.

Tequila Sunrise Hostels, which started in Guatemala over a decade ago and focuses on backpackers, students and digital nomads, has a 10-year lease with options on a two-level 1970s building at 428 George St in the Brisbane CBD.

The company is currently working on a fit-out in the building which will have 250 Japanese capsule style beds over a 1130sqm space. It aims to open in the fourth quarter of 2024.

First National Commercial’s Michael Koukides, who struck the deal, said the hostel market had shrunk during the covid pandemic.

“It was a large space and there was a need for a certain type of user. The office market has been quite flat so it was a matter of repositioning the building a find the right tenant,” he said.

“The tenant was attracted to the fact that the property was in an interesting spot with direct access to lifestyle amenity including shopping and entertainment precincts, education institutions and parks.”

Michael Koukides and the new Tequila Sunrise Hostels property at 428 George St in the Brisbane CBD.

The owners of the building were a private family and it was a duty free shop from 1993 to 2014 and then leased to Nuvocca Beauty College from 2014 to 2017 before being vacant for eight years.

Tequila Sunrise will be paying about $530sqm including outgoings and currently has hostelss in Adelaide, Gold Coast and Sydney.

Mr Koukides said the property offered development potential.

“The lease contract was conditional upon change of use to short term residential accommodation by a certain date so we had to assist with the pre lodgement and development application,” he said.

“The Brisbane City Council is being pressed to provide more housing accommodation in all forms and re positioning commercial buildings is a good strategy in the current market.

“As a result the approval was issued within three months from lodgement which is a relatively short period.

CHILDCARE SALE

Fund manager Clarence Property has divested a childcare centre between Brisbane and the Gold Coast after a campaign that attracted strong interest.

A private family paid $6.51m for the property at 5 Bahrs Scrub Rd, Bahrs Scrub, which has a long-term lease to Harmony Early Learning Childcare, which operates 15 centre across South East Queensland and Northern NSW with plans to open another 25 centres over the next three years.

CBRE’s Harrison Coburn, who managed the sale on behalf of Clarence Property, said the buyer was attracted by the significant depreciation benefits of the near-new asset, its strategic location in a high growth corridor along with its high occupancy.

“The competitive bidding demonstrated there is strong appetite in the sub $10m price range, with six formal offers presented at the EOI close and the purchaser selected due to their unconditional terms,” he said.

The sale realised a yield of 5.8 per cent.

The purpose-built childcare facility opened in May 2021. According to CoreLogic Clarence purchased the property in June 2021 for $5.6m.

The sale follows the sales of Little Locals, Ripley and Lead Childcare Kallangur over the past seven months, totalling about $26m.

“We expect new, high quality childcare investments in South East Queensland to remain highly sought after with opportunities decreasing due to ongoing feasibility challenges faced by developers,” Mr Coburn said.

Harmony Early Learning childcare centre at 5 Bahrs Scrub Rd, Bahrs Scrub.

FUND BUYS UP

A Queensland fund manager has acquired a warehouse/showroom in Brisbane’s premier outer northern industrial precinct, tapping into the strong growth momentum into the area

Trilogy Funds paid $29m for added another property for the 2.7ha site at 45-53 South Pine Rd, Brendale, which includes two street frontages and the warehouse/showroom featuring 18,850sqm of gross lettable area.

It is fully leased to educational resources company Modern Star Group and the sale realised a yield of just over 7 per cent.

With the latest acquisition, the Trilogy Industrial Property Trust now holds 15 industrial properties across Queensland, NSW, Victoria, South Australia, and the Northern Territory, worth more than $280m.

Trilogy Funds executive director lending and property assets Clinton Arentz said the continued demand for large industrial properties and strong investment fundamentals were important drivers for the Trust’s latest acquisition.

“The prime location of the Brendale property in one of Brisbane’s premier industrial business precincts, combined with its size, and strong tenant covenant make this a valuable addition to the Trust’s portfolio,” he said.

“The property is 100 per cent leased to a single tenant – a market leader with a 70-year track record in their industry – who has occupied the site for more than 20 years.

“With a Weighted Average Lease Expiry of approximately five years at settlement, this acquisition will assist the Trust in providing reliable and consistently growing income to investors.”

Inside Trilogy Funds new asset at 45 South Pine Rd, Brendale.

According to CoreLogic the property last changed hands in 2021 for $32.05m.

Mr Arentz said recent transaction yields and rental increases reflected the ongoing strength of the industrial market in Queensland.

“We are continuing to see strong demand for large industrial properties in the current Southeast Queensland market, with less than 1 per cent vacancy for buildings over 3000sqm,” he said.

“Certainly, industrial property continues to be an attractive investment proposition given long term structural themes playing out in commercial property markets globally. We look forward to seeing the evolution of the Trust’s property composition in the future as this structural shift plays out, with our current focus on manufacturing, logistics and distribution centres.”

The deal was struck by Modus Property Group.

Trilogy Fund's new asset at 45 South Pine Rd, Brendale.