PMG Engineering Group Pty Ltd is a private engineering and manufacturing business. The company has operated from this site for a number of years and has exercised options, demonstrating commitment to the location. However, as a private SME, there is limited public financial information available. The tenant is not a national covenant or listed entity. The HAZCHEM signage on-site indicates the handling of hazardous chemicals, which adds a layer of operational complexity but also suggests the tenant is operationally embedded in the site. Zeus Products Pty Ltd is also visible in the property photos, suggesting a sub-tenancy or shared occupancy arrangement that requires clarification from the agent.
Source: Property IM, site photos, agent discussion
The lease is a standard commercial net lease with the tenant responsible for all outgoings including council rates, water rates, and insurance. The lease term is 5 years from 1 January 2026 to 31 December 2030, with two further 5-year options. Annual rent reviews are fixed at 3.0% per annum, providing predictable income escalation. The net lease structure is appropriate for an industrial asset of this type and reduces the landlord's exposure to rising operating costs.
Source: Property IM, lease summary provided by agent
The WALE of 4.68 years (weighted by income) is acceptable for an industrial asset in this price range. The lease expires 31 December 2030, providing approximately 4.7 years of secure income from settlement. The two 5-year options extend the potential tenancy to 2040, which is a positive signal of tenant intent. A WALE above 4 years is generally considered acceptable for a single-tenant industrial asset.
Source: Property IM
Annual fixed rent reviews of 3.0% per annum provide predictable income growth over the lease term. The 3.0% fixed rate is broadly in line with long-run CPI expectations and provides a reliable escalation floor. There are no market rent reviews during the current term, which removes the risk of a downward review. Option periods are subject to market review at commencement, which introduces some uncertainty but is standard practice.
Source: Property IM, lease summary
The passing rent of $127.03/sqm NLA is below the current market range of $135 to $159/sqm for comparable industrial properties in Braeside and the Melbourne South-East precinct. This represents a discount to market of approximately 6% to 20%. While this creates a re-leasing reversion opportunity at expiry in December 2030, it also means the current income return is below what the market would support for a vacant property. The below-market rent is a risk factor if the tenant vacates, as re-leasing at market rates may take time and involve incentives.
Source: CRE leasing comps, agent discussions, InvestorKit market data
The building is approximately 30 years old based on the property photos and site inspection evidence. The warehouse presents as a functional, clear-span industrial facility with adequate clearance height, roller door access, and forklift-accessible aisles. The roof shows some age-related wear visible in the internal photos (translucent roof sheeting with signs of discolouration). A building and pest inspection and independent structural assessment will be required during Phase 2 due diligence to confirm the condition of the roof, cladding, and services. CapEx risk is elevated given the building age.
Source: Property photos, site inspection
The site coverage of 60.2% (1,826 sqm NLA on 3,033 sqm land) is appropriate for an established industrial precinct. The aerial photo confirms adequate hardstand and car parking at the front of the property, with the warehouse occupying the majority of the site. The elongated site configuration (narrow frontage, deep warehouse) is typical of Braeside industrial properties and does not represent a functional limitation. The site is fully fenced with a gated entry, which is appropriate for a HAZCHEM-rated tenant.
Source: Archistar, aerial photo, property IM
Braeside is an established industrial precinct within the City of Kingston, approximately 22km south-east of the Melbourne CBD. The property is located on Macbeth Street, a secondary industrial street within the precinct. EastLink access via the Westall Road interchange is approximately 3.2km (5 minutes), providing direct freeway connectivity to the Monash Freeway and the broader metropolitan freight network. The Port of Melbourne is approximately 25.4km (28 minutes) via the Monash Freeway. The location is well-suited to manufacturing, logistics, and distribution tenants.
Source: OSRM routing, Google Maps, InvestorKit value driver analysis
The property is zoned Industrial 1 Zone (IN1Z) under the Kingston Planning Scheme. This is the most permissive industrial zone in Victoria, allowing a broad range of industrial and warehouse uses without the need for a planning permit for most activities. The IN1Z zoning provides strong flexibility for re-leasing to a wide range of industrial tenants and reduces the risk of use-related vacancy. There are no heritage overlays or development plan overlays affecting the site.
Source: Kingston Planning Scheme, Archistar
The lease is a full net lease with the tenant responsible for all outgoings including council rates, water rates, insurance, and building maintenance. This structure minimises the landlord's exposure to rising operating costs and provides a clean net income stream. The management fee of $8,000 pa (capped per instruction) is the only non-recoverable cost deducted from gross rent in the NOI calculation. Insurance is confirmed as recoverable and is excluded from the landlord's cost base.
Source: Property IM, lease summary, agent confirmation
The primary vacancy risk is at lease expiry in December 2030. The tenant has two 5-year options but is not obligated to exercise them. Given the HAZCHEM fit-out and the operational embedding of the tenant, there is a reasonable probability of renewal, but this cannot be assumed. If the tenant vacates, the model assumes 6 months of vacancy and a re-leasing cost equivalent to 3% of property value as CapEx. The below-market passing rent ($127/sqm vs $135 to $159/sqm market) means re-leasing at market rates is achievable, but may require incentives in a softer market.
Source: Financial model, CRE market data, InvestorKit analysis
Given the building's age of approximately 30 years, CapEx risk is elevated. The roof in particular warrants close inspection during Phase 2 due diligence, as translucent sheeting visible in the internal photos is a common source of leaks and deterioration in buildings of this age. The model applies a CapEx allowance of 3% of property value at Years 5 and 10, totalling approximately $175,737 at Year 5 and $235,175 at Year 10. A pre-purchase building inspection report should be obtained to quantify near-term CapEx requirements before proceeding.
Source: Property photos, financial model, InvestorKit CapEx framework
The HAZCHEM signage visible on the site boundary fence indicates the tenant handles hazardous chemicals on-site. This is a standard feature of many industrial tenants in the manufacturing and engineering sectors. However, it introduces an environmental risk that must be assessed during Phase 2 due diligence. A Phase 1 Environmental Site Assessment (ESA) should be commissioned to identify any contamination risk, underground storage tanks, or soil/groundwater issues. The cost of remediation, if required, could be material and should be factored into the purchase price negotiation.
Source: Site photos, HAZCHEM signage, InvestorKit environmental checklist
The Archistar hazard mapping confirms the subject property is not within a flood overlay on the bushfire map. The flood map shows the broader Braeside area has some flood-affected areas to the south and east (near Mordialloc Creek), but the subject property on Macbeth Street is outside the flood zone. The bushfire map confirms no bushfire overlay applies to the subject property, which is consistent with its location within an established urban industrial precinct.
Source: Archistar hazard mapping, provided by client
Bushfire Hazard Map — Subject property NOT in bushfire overlay
Flood Risk Map — Subject property NOT in flood zone
The true net yield of 4.83% at the asking price of $4,640,000 is below the InvestorKit Commercial 5.00% minimum net yield threshold. The gap is 17 basis points. To achieve a 5.00% net yield, the purchase price would need to be $4,479,388 or below. The agent-stated yield of 5.00% is based on a different outgoings assumption (likely using a lower management fee or including insurance as a landlord cost). InvestorKit's calculation uses the $8,000 pa management fee cap and excludes insurance (recoverable). This is a FAIL on the yield threshold at the asking price, though the gap is narrow and a price negotiation to $4.48M would resolve it.
Source: Financial model, InvestorKit yield threshold framework
At the asking price of $4,640,000, the property fails the 5.00% net yield threshold by 17 basis points. The deal is not recommended at ask. However, at a negotiated price of $4,479,388 or below, the property achieves the 5.00% threshold and becomes a conditional pass. Key conditions for proceeding: (1) price negotiation to $4.48M or below; (2) Phase 1 Environmental Site Assessment to assess HAZCHEM contamination risk; (3) independent building inspection to quantify near-term CapEx; (4) clarification of the Zeus Products sub-tenancy arrangement; (5) confirmation of the tenant's financial covenant. Tthe renewal uplift opportunity (base $160/sqm, with 15% and 20% uplift scenarios) is a genuine upside case that materially improves the IRR from 8.26% to 12.10% to 13.17% but this is contingent on market conditions in 2030 and cannot be relied upon at entry.
Source: InvestorKit Commercial 16-point framework, financial model
Aerial – Subject Property
Street Frontage
Internal Warehouse