The Brief

The client already held commercial property across several states. Victoria was the gap. The mandate was specific: medical, metropolitan Melbourne, enough scale to be worth the administration, and income that would hold up without the client needing to think about it week to week.

Nothing about that brief is unusual. That is precisely the problem with it. Every private investor with $7m and an interest in healthcare property is writing the same brief, and they are all reading the same listings.

What the Market Was Offering

Two things worth naming.

The first is competition. Campaigned medical assets in metropolitan Melbourne in this price band attract deep bidder pools — private capital, syndicates, funds with a healthcare mandate. A buyer arriving through the front door is competing against everyone else who arrived the same way, and the price reflects it.

The second is definitional. A great deal of stock is marketed as medical when it is an ordinary building with a doctor in it. The tenant supplies the label; the building supplies nothing. Those assets look like healthcare property on the marketing brochure and behave like secondary suburban office at the first lease expiry.

We were not interested in either category.

How We Approached It

We started by defining what makes medical income durable, because that definition is what drives the search. Purpose-built or genuinely purpose-adapted improvements. Patient parking that works. Main road exposure, because visibility drives referral and patient retention in a way that matters more in healthcare than in most sectors. A catchment that supports the practice. And a tenant with capital sunk into the fit-out.

With those parameters set, the search ran through direct approaches to owners rather than through listing platforms. That is slower. It is also the only way to transact against a shallow bidder pool rather than a deep one.

The Outcome

A modern medical building on a large corner site with main road frontage and strong exposure, acquired at circa $7m on a 6% net yield, with four years remaining to a longstanding tenant.

Four years is not a long lease, and we said so at the time. It is shorter than a lot of buyers in this band will accept. We were comfortable for three reasons: the tenant had been in the building a long time, the fit-out capital sitting in the premises makes relocation expensive, and the corner site underneath the income holds its value irrespective of who occupies it.

The client now has Victorian exposure in a sector they understand, on a site that will still be worth owning in a decade.