Big money gets behind the bar in Melbourne’s pub scene

The former owners of St Kilda landmark The Espy are selling their pub on the other side of town, the Hotel Fitzroy, just as property giant Charter Hall swoops on the Great Britain Hotel in Richmond for $9 million.

A rash of pub deals will usher in a fresh landlords and operators, particularly institutional owners and operators who are becoming more dominant in the market with their deep pockets that help trade through tough times.

Harlow at 447 Church Street, Richmond.

Charter Hall’s purchase of the hotel, now known as Harlow, shows that the relatively puny size of Melbourne’s pubs (compared with Sydney’s) can command solid prices, even without pokies, despite a tough hospitality market.

Add pokies, with their wallet-draining income, and prices surge.

Mordialloc’s Bridge Hotel is tipped to sell for around $40 million after changing hands in 2021 for $14.25 million and getting a big makeover. Both the freehold and the business are for sale through JLL and Stonebridge.

JLL’s Will Connolly said: “2024 has certainly been a dynamic year for the pub market and publicans have to navigate the ‘ups and downs’ of business on a week-to-week basis.”

“The economic pressures affecting some of the public means publicans have to be more creative to sustain their customer base.”

Owner operators are still buying into pub market. The Royal Mail hotel at 515 Spencer Street recently sold to an undisclosed operator for around $4 million through Vinci Carbone.

It last transacted in 2021 to a consortium including former Aussie Rules footballer Stephen Silvagni, for $800,000.

The Harlow sale, with a new 15-year lease to hotels giant AVC, was struck at a buoyant 5.7 per cent through Fitzroys’ Paul Burns and Chris James. Hospitality veterans Mark Robertson and Will Studd paid $3.4 million for it in 2012.

The Adamo and Sofo families’ five-level Hotel Fitzroy, home of Ichi Ni Nana Izakaya, is expected to sell for around $10 million. The 125-129 Brunswick Street hotel, opposite the Atherton Gardens estate, has had several names since it was built in 1849, including the Brunswick Family Hotel, the Brunswick Hotel and the Old Colonial.

The Hotel Fitzroy at 125-129 Brunswick Street, Fitzroy.

The 1500 square metre pub has a coveted 3am liquor licence and its current businesses are on month-by-month leases.

Records show an Adamo and Sofo-owned company called Saint Kilda – a nod to the past – bought the hotel in 2012 for $4.84 million. When they shut the Espy in 2015, they opened the new hotel.

Their last St Kilda stronghold, another Ichi outlet next door to the Esplanade Hotel at 12 The Esplanade, closed in February after AVC bought the property.

Cushman & Wakefield agents Oliver Hay, Anthony Kirwan, George Davies and Leon Ma are handling enquiries.

Also for sale is the Commercial Hotel in Fitzroy at 344-348 Nicholson Street, which has a price tag of $5 million, and the Fox at 351 Wellington Street, Collingwood.

JLL’s Connolly and Lachlan Persley are also expecting around $4 million for the National Hotel at 340-344 Victoria Street, Richmond. The pub has been held by the same family for more than 50 years.

West End

There’s plenty of change afoot in the CBD’s west end with student accommodation developer Iglu, building a new twin-tower dormitory at 354-360 William Street, opposite the Flagstaff Gardens.

Records show Iglu is the new owner of the 1200 sq m site which was off-loaded by Albert and Deborah Dadon’s Ubertas Group last year for $34.92 million.

Iglu has started work on 354-360 William Street, Melbourne.Credit: Nicole Lindsay

While the site was once earmarked for a 19-storey hotel, Iglu, backed by Singapore sovereign wealth fund GIC and Macquarie Capital, have switched it to student accommodation with 485 rooms. Nice digs.

Iglu already has another facility on the other side of the park at 7 Batman Street, on the corner of King Street.

Earlier this year, the Dadons sold the hotel next door, the Oaks on William, to a hotel-operating consortium headed up by the Chen family for $67 million.

Dadon bought 350 William Street from legal firm Holding Redlich in 2005 for $12.8 million, embarking on a 35-storey tower, which included 376 apartments and a 220-room hotel.

Also likely to shift its use is the nearby 600 Lonsdale Street, which Andy Zhang’s V-Leader has put up for sale with high hopes of around $65 million. Early works have already started on the 1918 sq m site which was cleared in 2022.

Cushman & Wakefield ’s Daniel Wolman, Hay and Ma have the listing.

Infill site

Listed agrichemicals business Nufarm has offloaded its Laverton North property for $32 million.

Records show the 5.3 ha parcel at 8-18 Hume Road settled last week. The new owner is a private developer called Binary Laverton, headed up by Jian Zhao, which outbid institutional rivals for the infill property.

US supermarket giant Costco paid $33.37 million to Powercor last year for a 5 hectare site on Ballarat Road, Ardeer.

Colliers agents Nick Saunders and Hugh Gilbert, who did the deal, said eight bids were lodged for the land which is about 17 kilometres west of the city in an area dominated by big players such as Lineage, Bunnings, Holcim and Infrabuild.

The west’s vacancy rate is running at 0.43 per cent.

Summer fun

Fancy owning a boutique hotel in the well-heeled seaside resort town of Sorrento? The freehold to the seven-apartment project, Carmel@Sorrento is up for grabs just in time for this summer’s high season.

Developed by the Five One Group in 2018, the apartments, shops and seven car parks at 142-146 Ocean Beach Road cover 11 titles but are for sale in one line. Its $10 million price tag is well short of current construction prices.

Carmel @Sorrento at 142-146 Ocean Beach Road.

Stonebridge’s Nic Hage, Rorey James and Kevin Tong are handling the expression of interest process.

The shops are currently leased to the Monica Art Gallery, Hunter Lab and Moonah CPM and the total investment returns $271,108 a year.

Well-heeled

In another well-heeled corner of the city, the Bed Bath N’ Table shop at 48 Church Street, Brighton sold for around $4.7 million.

Fitzroys agents Mark Talbot and Tom Fisher did the deal with an investor already on its database. They declined to disclose the price but the sharp yield of 3.6 per cent combined with the $171,600 a year rent delivers a reliable guide.

Church Street has had an average vacancy rate of just 1.31 per cent over the past seven years, according to Fitzroys’ survey of vacancy rates, Walk the Strip, compared with the citywide average of 7.59 per cent.

48 Church Street, Brighton.

The next test of the blue-chip retail strip market is in Camberwell next week when 570-572 Burke Road goes to auction.

The shop which is leased to Specsavers and Woodfrog Bakery returns $283,359 a year in rent.

Fitzroys’ Chris James, David Bourke and Ben Liu will run the auction process and expect about $4.5 million. Last month, 626 Burke Road sold for $5.08 million.

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