Investors pile into Melbourne suburban offices

 Larry SchlesingerReporter Aug 19, 2019 — 5.23pm Australian Financial Review

Investors and developers have piled into Melbourne's fringe and suburban office markets in a sign of confidence in non-CBD commercial real estate following the federal election.

Spurring them on have been the strong market fundamentals of low vacancy rates, rising rents and rising land values.

Most recently, the well-located South Melbourne office market has proved a sweet spot for investment, two small offices selling for around $18 million in July and August.

At 34 Eastern Road, Valeo Construction's Dimitrios Tzouvelis sold a two-level vacant building for around $10 million to developer H.CO Property at a land rate of almost $12,000 per square metre.

It last sold for just over $6 million in 2015. It is understood CBRE handled the sale in an off-market deal. The firm declined to comment. H.CO managing director Michael Tiemens told The Australian Financial Review he was "excited about the opportunities on the city fringe" and in particular markets like South Melbourne.

He said H.CO would look to undertake a multi-storey office and retail development on the site in the coming years. At 100 Park Street in South Melbourne, a three-level office building owned by Rescom Mortgages sold with vacant possession to a local buyer for $8.088 million at an auction handled by CBRE's Julian White, Dylan Kilner & Chao Zhang Rescom Mortgages sold an office building at 100 Park Street.  “South Melbourne is now the most in demand city fringe market. Access to beachside suburbs, St Kilda Road and the Melbourne CBD along with its famous cafes are what makes it so appealing to all buyer types," Mr Kilner said.

Further afield, well known Melbourne supermarket owners Leo and Rose Blake sold a multi-storey office building at 3-7 Hamilton Street in Mont Albert for about $18 million, having paid $13.4 million in 2007. A caveat on the title shows the buyer is Troon Group, an offshoot of well known Ballarat builder H. Troon. In Malvern East, Momentum Wealth Management Group director Paul Huggins sold a two-level corner office for about $13 million. These Waverley Road offices were occupied by Dennis Family Homes. Supplied He bought 207-213 Waverley Road in 2014 for $7.85 million in  leaseback deal with vendors the Dennis family, who had used the property as the head office for Dennis Family Homes for decades. The buyer is understood to be fund manager Collective Capital. 

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Aurient Investment Partners will be seeking investors to co-invest in the South Melbournecommercial office project in 2020.

 

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