FLIGHT CENTRE LEASE BUOYS SALE PROSPECTS
Written on the 24 July 2015
LISTED travel group Flight Centre (ASX:FLT) is set to open a new flagship Melbourne CBD store after signing a 10-year lease at Victoria Harbour.
The move is seen as a confidence boost for the 852 Collins Street building which is set to go to auction later this year.
Colliers International's Daniel Wolman and Oliver Hay, who are marketing the property for sale, says the property is expected to attract keen interest, due in no small part to its new long-term flagship tenant.
"When it comes to Collins Street retail, this is the best returning asset currently available in a tightly held market," says Wolman.
"Investors will recognise that this asset will quickly appreciate and sell for sub-4 per cent once the overall building is complete."
Agents are targeting a 5 per cent return when the property goes to auction as Colliers ramps up its leasing campaign for the property.
Flight Centre, which operates more than 2800 stores in 11 countries, has taken 251sqm of ground floor retail space at 852 Collins Street at a gross rental of about $710/sqm.
"This flagship premises will offer up to six different business under one roof including travel services such as flights, hotel and car hire and cruises; insurance; holiday packages; travel visas; money exchange and corporate travel packages," says Georgie Cichy, who negotiated the lease with Flight Centre.
"The Victoria Harbour retail precinct is on an incline, despite the previous high retail vacancy figures," she says.
"Retailers are looking to 'future proof' their expansion plans in support of the burgeoning office, retail and residential market in this area."