Boulevard of brokered deals
A burst of activity in St Kilda Road, one of Melbourne's prime office strips, during December and January saw several buildings change hands or hit the market.
Start-up syndicator Newmark Property Group finalised an $81 million transaction for 417 St Kilda Road, first mooted in September last year. Challenger's annuities fund, Challenger Life, put the building on the market in May.
Director Chris Langford confirmed investors in the group's unlisted property trust had bought the 10-storey office block that came with at least 20,000 square metres of net lettable area and major tenants Oracle and the Red Cross.
"Certain office markets are performing very well and there's strong demand," Mr Langford said.
In another deal, 332 St Kilda Road was sold by interests linked to the late property developer and philanthropist Isador Magid.
Agents Knight Frank and DTZ would not comment on the deal but sources said the seven-level building with a net lettable area of more than 5000 square metres was purchased for an undisclosed sum by a Melbourne-based private investor.
Buyers have maintained the momentum this year, Lemon Baxter director Paul O'Sullivan said.
"Demand already this year has far outstripped what I've seen in the last five years. That's going to lead to real yield compression and competition for quality assets," he said.
Two St Kilda Road buildings are undergoing due diligence and a third has come on the market.
An undisclosed party is looking at 324 St Kilda Road and further along the boulevard, APN Property Group is looking at 541 St Kilda Road, a six-storey building with more than 8000 square metres of lettable area occupied by SEEK.
Next week, Jones Lang Lasalle is expected to begin an expression of interest campaign for 432 St Kilda Road, a refurbished building with a net lettable area of 9100 square metres owned by investment and funds manager Prime Value. Also on the market is 615 St Kilda Road.
In a deal on Christmas Eve, 436 Johnston Street in Abbotsford sold for about $32 million to Prime Value, sources said. Agent Dawkins Occhiuto would not comment.
Other year end sales include:
■Hallmarc bought 14 Queens Road for $13 million through agent MP Burke Commercial.
■101 Cremorne Street in Richmond was believed to have changed hands for about $15.5 million.
■71 Moreland Road in Footscray was sold by Centuria Funds to a private investor for $14.4 million.
■The AAPT building in Burnley Street, Richmond, was believed to have sold for about $20 million.
Colliers International, which dealt with the last three sales listed, would not comment.
Frequently Asked Questions about this Article…
Buyers completed several notable deals on Melbourne's St Kilda Road around December and January. Highlights include Newmark Property Group finalising an $81 million purchase of 417 St Kilda Road, and 332 St Kilda Road being sold by interests linked to the late developer Isador Magid to a Melbourne-based private investor. Other St Kilda Road assets were coming onto the market or undergoing due diligence.
Start-up syndicator Newmark Property Group finalised an $81 million transaction for 417 St Kilda Road. Director Chris Langford confirmed investors in the group's unlisted property trust bought the 10-storey office block, which has at least 20,000 square metres of net lettable area and major tenants including Oracle and the Red Cross.
Challenger's annuities fund, Challenger Life, had put 417 St Kilda Road on the market in May, which preceded the eventual $81 million sale to Newmark Property Group investors.
According to the article, two St Kilda Road buildings were undergoing due diligence. An undisclosed party was looking at 324 St Kilda Road, APN Property Group was looking at 541 St Kilda Road (a six-storey building occupied by SEEK with more than 8,000 square metres of lettable area), Jones Lang LaSalle was expected to start an expression of interest campaign for 432 St Kilda Road (a refurbished building with about 9,100 square metres NLA owned by Prime Value), and 615 St Kilda Road was also on the market.
Lemon Baxter director Paul O'Sullivan said demand early in the year had already far outstripped what he'd seen in the last five years, a trend he said would lead to real yield compression and increased competition for quality assets. Newmark's Chris Langford also noted certain office markets were performing very well with strong demand.
Other year-end sales reported in the article include 436 Johnston Street in Abbotsford sold for about $32 million to Prime Value; Hallmarc bought 14 Queens Road for $13 million; 101 Cremorne Street in Richmond reportedly changed hands for about $15.5 million; 71 Moreland Road in Footscray was sold by Centuria Funds to a private investor for $14.4 million; and the AAPT building in Burnley Street, Richmond, was believed to have sold for about $20 million.
The article mentions a range of agents and managers: Knight Frank and DTZ were connected to 332 St Kilda Road (both declined comment), Jones Lang LaSalle was set to run an EOI campaign for 432 St Kilda Road, Prime Value was both an owner and a buyer (owner of 432 St Kilda Road and buyer of 436 Johnston Street), Colliers International handled several of the sales listed and declined to comment, and agents such as Dawkins Occhiuto and MP Burke Commercial were also referenced in relation to specific deals.
The article suggests a renewed appetite for quality commercial office assets in Melbourne, with multiple transactions, properties coming to market, and buyers conducting due diligence. Brokers quoted in the piece expect increased competition and real yield compression for quality assets, which everyday investors should watch as it can influence income returns, valuations, and the availability of investment opportunities in commercial property.
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