CAPITAL GAIN

Reaching for the sky at top-of-town site

Reaching for the sky at top-of-town site

Developer Banco Group is understood to have sold a major development site at the top of town for $23 million. The 97-105 Franklin Street block, identified as a low-rise commercial building, is expected to make way for at least one major residential skyscraper, though the new owner's plans for the site are not yet known. Nor is their identity.

The block is almost next door to the former Stork Hotel site at 500 Elizabeth Street, which developer Brady Group bought at a frenetic auction in 2008 - famously paying almost twice the price the property was expected to sell for. Brady later was permitted to build a landmark, 67-level, 471-unit complex on the Stork site.

Banco Group was also expected to build an apartment tower on its site in a pocket of town where low-rise commercial buildings are increasingly being replaced with skyscrapers. CBRE's Mark Wizel is understood to have sold the property this time around in an off-market deal.

A Banco representative was unavailable for comment.

Not far from Carlton and the Melbourne Central train station, 97-105 Franklin Street is also close to the former CUB site, now owned by Grocon, and earmarked to become a skyscraper compound. A couple of years ago, a 92-level apartment building was proposed on a section of Grocon's land.

The former City Mazda dealership, not far away from Franklin Street, was recently sliced into five small blocks and sold down to developers.

One of the largest buildings since built on that site - a 25-level, 280-unit apartment building with 69 car spaces - was developed at 206 A'Beckett Street.

Towers developed on the former City Mazda site are among those set to lose million-dollar north-facing views (and light) if part of the Queen Victoria Market car park across the road is sold to apartment developers to fund a $100 million upgrade of the 135-year old complex.

Near-new offices

Private investor and former restaurateur George Saade is readying to list for sale a near-new Richmond office building, developed during the economic downturn and now fully leased.

The five-level office with a double-storey, 90-bay underground car park at 543 Bridge Road includes about 5000 square metres of high-end office space. Identified by its black and glass exterior, the asset is expected to sell for about $27 million.

ANZ, Kathmandu and Pulse Pharmacy are among the tenants in the mixed-use building, near the north-east corner of Burnley Street. Sports management company Elite, founded by former athletes Craig Kelly and Rob Woodhouse, also operates from the property.

Mr Saade, the former proprietor of Armadale eatery Giorgios, develops commercial and residential projects. His company is redeveloping Prahran's Station Hotel on Greville Street into a high-end, mixed-use project with 41 flats.

Colliers International's Peter Bremner and Rob Joyes are marketing 543 Bridge Road with Savills' Clinton Baxter and Nick Peden. It is expected to hit the market next month.

Change of Kustomers

It will be the end of an era in Hawthorn with owner-occupiers of modern art space the Kustom Kulture Gallery selling their site to Sydney-based developers for $2.75 million.

The block at 8 Luton Lane includes a gallery and small commercial space used for manufacturing.

It spreads across 1020 square metres and backs onto shops on the western side of the popular Glenferrie Road shopping strip.

In 2010, the vendors successfully lobbied the Victorian Civil and Administrative Tribunal to develop a five-level, 41-unit apartment complex on the site. The proposal was earlier refused by the Boroondara City Council.

Earlier this year, the site was listed for sale via agency Teska Carson. Agent Tom Maule said residential developers contested for the property.

Apartments within the complex could be marketed for sale immediately, although it is expected the new owner will reconfigure the number of units within the permitted five-level structure.

Omnico move pays off

Local developer Omnico Corporation has made $8 million selling almost two-thirds of the 28 strata units within a new office building in Ringwood, about 23 kilometres east of town.

The 50 New Street building is under construction opposite Ringwood Square Shopping Centre and close to the former Ringwood Market site, which is being replaced with Melbourne's second Costco.

Omnico purchased the land where the New Street office is being developed from McDonald's, which listed it for sale after siphoning the portion it wanted to develop as a restaurant, and subdividing the balance into three.

McDonald's larger site was formerly a Ford car dealership with major frontage to the busy Maroondah Highway.

Knight Frank selling agents Tim Grant and Chao Zhang said 80 per cent of strata office buyers at New Street plan to owner occupy. Strata suites range in size from 42 square metres to 260 square metres.

The 3200-square-metre office complex, due for completion in October, will also include basement car parking and dedicated conference and boardroom facilities. It will boost Ringwood's total office supply by 10 per cent to about 31,000 square metres.

Mr Zhang said Ringwood has a low office vacancy rate of 2 per cent.

Knight Frank is marketing the suites with Ringwood-based agency Thompson May.

Ringwood's low vacancy gave Omnico the confidence to develop the office building without first seeking a tenant or buyer pre-commitment - something considered unusual in a downturn.

Not far away on the corner of Maroondah Highway and Oliver Street, a 2272-square-metre block with a permit for a four-level, 44-unit apartment complex and 54 basement car parks is for sale. Jones Lang LaSalle's Matthieu Lucas and Steven Messina expect the site to sell for about $3 million.

Ringwood is now about 25 minutes from Melbourne's central business district.

Well schooled

Education entrepreneur Shesh Ghale - the owner of private college Melbourne Institute of Technology - can expect about $22 million from the sale of a CBD office building he bought in 2004 and converted into classrooms.

Mr Ghale paid $12.1 million for the 14-level, 6902-square-metre building at 388 Lonsdale Street, negotiating with office tenants to vacate the space so it could be converted to a school.

At the north-east corner of Hardware Street and opposite the Hardware Lane cafe precinct, the property is between the Flagstaff and Melbourne Central railway stations. The 54-year-old tower occupies a 689-square-metre block near the city's legal precinct.

Since buying 388 Lonsdale Street, Mr Ghale has purchased other Melbourne sites for MIT, including the historic Argus Building at the corner of Elizabeth and La Trobe streets and which is undergoing a $60 million restoration.

The classes at Lonsdale Street will be moved to the Argus building, which Mr Ghale bought from La Trobe University for $15 million in 2010.

Savills' Clinton Baxter is marketing 388 Lonsdale Street, as well as Victoria University's 300 Flinders Street campus, which hits the market next week with an asking price of $45 million.

Mr Baxter said Lonsdale Street had the potential to earn $1.9 million in annual rent. It is expected to sell on a yield of about 8.5 per cent.

Marcpallisco@gmail.com

Twitter: @marcpallisco

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