Retail Investment | $2,880,000 | Net Yield: 6.50% | VIC

This off-market Victorian retail investment secures a near-new ground-floor tenancy within Victoria Square, a mixed-use development by Growland in Footscray, around 5 km west of the Melbourne CBD. Positioned on the corner of Hopkins Street and Hallenstein Street beneath multiple residential towers, the property pairs a built-in residential catchment with fixed 4% annual rental growth and a tenant operating within a national fitness network.

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At a purchase price of $2,880,000, the investment generates approximately $187,248 in net annual income, delivering a 6.50% net yield. The lease is structured on a net basis, with the tenant responsible for outgoings other than land tax and property management, which have been accounted for in the stated net income.

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The property is leased to Plus Fitness 24/7 Footscray on a new five-year lease that commenced in May 2025 and runs to May 2030, with a further five-year option providing potential tenure through to 2035. Rent increases by a fixed 4% each year. On this basis, gross passing rent of $196,224 per annum is projected to grow to approximately $238,700 by the end of the initial term, assuming the increases apply as scheduled. A bond equal to three months' rent plus GST is held as security.

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Plus Fitness was established in 1996 and now operates more than 300 locations across Australia, New Zealand and Asia. Since 2020 the network has been part of ASX-listed Viva Leisure Limited (ASX: VVA), which also operates the Club Lime and Hiit Republic brands. The Footscray gym is run by a franchisee, which is the lessee, with training, marketing and operational support provided by the Plus Fitness head office. A 24-hour operating model suits the residential population living directly above the tenancy.

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The asset comprises approximately 480 sqm of lettable area, made up of 424 sqm of retail accommodation and a 56 sqm storage area. The tenancy is configured over split levels and offers high ceilings, strong natural light, end-of-trip facilities and clear street exposure. Nine on-title car spaces and multiple storage cages are included, which is uncommon among inner-city retail assets.

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Completed around 2023, the building presents in good condition and may offer depreciation benefits, subject to individual tax circumstances. The configuration also provides flexibility. Subject to council approval, the space could suit retail, office, showroom or food and beverage uses, or be divided into two separate tenancies. A 2025 independent valuation assessed the passing rent as in line with market.

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The property was previously acquired through Rethink Investing in 2025. At that time it underwent an independent valuation, building investigations and a lease review, with no issues identified. Recent strata records reviewed made no mention of major defects, combustible cladding, water ingress, litigation or significant capital works.

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Footscray is one of the most rapidly changing precincts in Melbourne's inner west, with substantial high-rise residential development, population growth and infrastructure investment. The property is within walking distance of Footscray Railway Station, a major metropolitan interchange, as well as Footscray Market and the Barkly Street retail precinct. Road access to the Bolte Bridge and the M2 via Dynon Road connects the site to the CBD and the western suburbs.

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Accounting for estimated purchasing costs, the net yield equates to approximately 6.01%. Based on an assumed 65% loan-to-value ratio and 6.5% annual interest rate, the property is projected to generate approximately $65,568 in annual cash flow after mortgage interest expenses, representing an estimated 5.27% cash-on-cash return on the total cash contribution of $1,244,020.

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These figures reflect acquisition modelling assumptions and are not guaranteed returns.

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With a 6.50% net yield, fixed 4% annual increases, a near-new building and a deep residential catchment in one of Melbourne's growth precincts, this off-market investment reflects the calibre of commercial property Rethink Investing continues to secure for clients across Australia.

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