Two prominent office buildings on Melbourne’s St Kilda Road have entered the market, the first such opportunities in over a year along the leafy boulevard on the outskirts of the city.
At 570 St Kilda Road, investment manager Terraplex is marketing a 7,647 m² building, which it acquired almost ten years ago. It could make $ 65 million or more.
One block down and across the working-class area to the CBD is 607 St Kilda Road, a 7207m², privately held office building that is on the market with hopes of the around $ 60 million.
Significantly, both opportunities present themselves as Melbourne prepares for its much-anticipated exit from its long sixth lockdown.
The two assets are the first $ 50 million deals in the enclosure for more than a year. In contrast, while the pandemic has disrupted the usual CBD tower trade, there has been a constant trickle of commercial properties changing hands over the past 18 months.
Major tenants at 570 St Kilda Road include Simonds Homes, Accolade Wines and ALM Williams Partners after its landlord invested in a renovation.
“We are incredibly proud of the performance of the building over the past nine years, but the closed-end fund in which 570 St Kilda Road is located has reached its natural conclusion,” said Terraplex directors Anthony Wilson and Charles Raymond.
Kiran Pillai, Scott McGlone and Hugh Thomson of CBRE, as well as Leigh Melbourne, Nick Rathgeber, Mark Hansen and Josh Cullen of Cushman & Wakefield, have been appointed to negotiate this property.
“All of the major tenants have recently re-engaged in the building, which will boost confidence in a market heavily focused on income rigidity,” Pillai said.
Across the boulevard, 607 St Kilda Road generates a large chunk of its revenue from hospital operator Alfred Health, making it a potential target for health-focused property investors.
“The Melbourne office investment market has been starved of opportunity in 2021, with a single business asset of over $ 50 million that has changed hands in St Kilda Road in the past 24 months,” said Josh Rutman of JLL, who manages the property with Cushman & Wakefield’s Leigh Melbourne.
“It’s no surprise that buyers are actively looking for properties within the precinct. The motto of St Kilda Road has evolved as tenants seek to locate near the CBD and within walking distance of green spaces and the future Anzac train station.
The last major office transaction at the compound was the sale of the Flight Center building at 436 St Kilda Road for $ 62.15 million to the Shakespeare real estate group in May of last year as part of a sale-leaseback type transaction.
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