The site at 98-100 Koroit Street is leased by Jax Tyres and Auto and has a net income of $81,934.

It was auctioned by Burgess Rawson, with Ludeman agent Mark Dwyer co-listed for the sale.

"It was a huge result, the vendor would be very pleased I'm sure," Mr Dwyer said.

He said commercial properties in Warrnambool with long-term leases in place were attracting top prices.

The opening bid for the site was $1.4 million, with a flurry of interest from a number of bidders at the Crown Casin in Melbourne before it was bought for $1.83 million.

Jax Tyres has a lease for seven years, with two five year options.

Auctioneer David Scholes told those in attendance the site was an "absolutely phenomenal retail investment".

"Warrnambool is just a brilliant location," Mr Scholes said.

"It has a stand alone economy."

Mr Scholes said decentralisation due to the coronavirus pandemic had resulted in the seaside city becoming a more popular choice with buyers.

He said Jax Tyres and Auto was a respected brand, with locations all over Australia.

"They position their enterprise in the best location in town," Mr Scholes said.

The building underwent an extensive refurbishment in 2019.

"It's an absolutely brilliant building and you couldn't get a better tenant if you tried," he said.

The site offers 483-square-metres and is zoned commercial 1.

Commercial properties deemed "set and forget" are in high demand across the state, according to Ray White's head of commercial research Vanessa Rader.

She said low interest rates were resulting in more buyers wanting to invest.

"With interest rates so low there is a growing number of private investors and often first-time commercial buyers in the marketplace looking to diversify from a traditional residential investment given the rapid increases in values we have seen in residential," she said.

"As such there has been strong yield compression across most property types however this is usually heavily linked to assets which are tenanted."

Ms Rader said there was a shortage of good quality commercial properties on the market, which was driving up prices.

"Assets of any type with a secure lease covenant are what is in greatest demand, however there is some hesitation for retail and office if not tenanted," she said.

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