Office Investment | $2,800,000 | Net Yield: 7.74% | VIC

This Victorian office investment presents an opportunity to secure a modern, two-level commercial office and showroom asset within an established metropolitan commercial precinct. Leased to a longstanding professional services business, the property combines strong passing income, long-term lease security and structured annual rental growth, supported by a well-presented building and established tenant occupancy.

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At a purchase price of $2,800,000, the property generates approximately $216,726 in net annual income after non-recoverable expenses, delivering a 7.74% net yield. The investment is underpinned by a recently renewed five-year lease extending to November 2030, with two further five-year options providing potential tenure through to 2040.

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The lease incorporates fixed annual rental increases of 4%, providing a clear pathway for contractual income growth throughout the lease term. This structured rental escalation supports increasing income over time, while the tenant's responsibility for usual property outgoings helps maintain the investment's net return.

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The asset comprises approximately 411 square metres of modern office and showroom accommodation arranged across two levels. Completed in 2015, the property offers a functional commercial layout suited to professional services, consulting and other office-based operations, supported by contemporary finishes and eight undercover car spaces held on title.

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The building's modern construction and established commercial configuration provide a practical environment for the existing tenant, while offering potential flexibility for alternative office or showroom occupiers in the future, subject to planning requirements and market demand.

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A key feature of the investment is the tenant's longstanding occupancy and established business operations. The property is leased to a professional accounting and advisory practice with more than 20 years of industry experience, providing services across taxation, business advisory, superannuation and financial consulting.

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The tenant has occupied the premises since the building's completion in 2015, demonstrating a sustained commitment to the location. The recently renewed five-year lease, together with two further five-year options, provides a strong foundation for continued occupancy and long-term income visibility.

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The property's financial structure is supported by annual passing rental income of approximately $229,438, with non-recoverable ownership and management expenses factored into the final net return. After these deductions, the asset generates approximately $216,726 in net annual income, equivalent to a 7.74% net yield on the purchase price.

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Fixed annual rental increases of 4% provide consistent contractual growth, with five consecutive annual increases equating to approximately 21.7% cumulative rental growth, assuming the stipulated increases apply throughout the period. This compounding income profile offers investors a defined rental growth mechanism alongside the property's existing yield.

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Positioned within an established metropolitan commercial precinct, the property benefits from strong accessibility, public transport connectivity and surrounding retail, hospitality and professional services activity. Its location within a mixed commercial and residential environment supports ongoing demand for well-connected office accommodation.

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The broader Victorian metropolitan office market continues to evolve as businesses seek accessible, functional and well-located premises. Established commercial precincts offering public transport access, surrounding amenities and dedicated parking remain relevant to businesses seeking convenient accommodation for employees and clients.

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The property's eight undercover car spaces provide additional utility within an established urban commercial environment, while its two-level office and showroom configuration offers flexibility for a range of potential future occupiers.

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At a purchase price of $2,800,000, the investment delivers a 7.74% net yield on approximately $216,726 in annual net income. Accounting for estimated purchasing costs, the net yield equates to approximately 7.16%.

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Based on an assumed 65% loan-to-value ratio and 6.5% annual interest rate, the property is projected to generate approximately $98,426 in annual cash flow after mortgage interest expenses, representing an estimated 8.15% cash-on-cash return on the total cash contribution of $1,207,950. These figures reflect acquisition modelling assumptions and are not guaranteed returns.

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The combination of established tenant tenure, structured rental growth and a modern commercial building provides an income-focused investment proposition, while the property's metropolitan location and adaptable configuration offer potential longer-term leasing and capital growth opportunities, subject to market conditions.

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With a longstanding professional services tenant, renewed five-year lease, 4% annual rental increases, eight undercover car spaces and a strong net income profile, this investment reflects the calibre of commercial property opportunities Rethink Investing continues to identify for clients across Australia.

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