Capital Gain

Home invasion in boulevard office belt
By · 12 Oct 2013
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12 Oct 2013
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Home invasion in boulevard office belt

Anondescript office building in tree-lined St Kilda Road abutting Fawkner Park is set to be replaced with a major residential project.

Local developer Les Smith has sought permission from Planning Minister Matthew Guy to replace the Fawkner Centre at 499 St Kilda Road, with a 20-level complex of 245 apartments and 292 car park bays.

The building will occupy only a portion of the large site, which Mr Smith and a consortium purchased for $55 million 11 months ago.

The land is expected to eventually make way for more than one apartment building.

Mr Smith's proposed height of 20 levels surpasses most buildings in St Kilda Road that are limited to 12 levels.

Only a few years ago, developer Ubertus replaced what was considered St Kilda Road's first major office building at No. 505, with an apartment tower. Like 499 St Kilda Road, Ubertus' block backs onto Fawkner Park, offering desirable views.

Other offices recently replaced with apartment buildings are at 430 St Kilda Road (now Lucient) and 576 St Kilda Road (Yve).

In coming years, apartment complexes are expected to replace the super-sized 474 St Kilda Road block (the long-time home of Clemenger communications). Developers have also targeted offices on Queens Road, opposite Albert Park Lake, for replacement with residential complexes.

Stop the presses!

One of Melbourne's most over-capitalised properties has been listed for sale by Fairfax Media, owner of The Age.

The super-prominent Fairfax printing facility, abutting the Tullamarine Freeway in Westmeadows, near Melbourne Airport, is expected to sell for a little more than $20 million, possibly to a retailer such as a car dealership or a freight-forward or logistics company. Rival media giant News Corp was also once reported as a suitor.

The 24,091-square-metre facility occupies part of a 59,750-square-metre block with a 252-metre frontage to the freeway, which has more than 60,000 commuters passing each day.

Portions of the site used as car parking and gardens are being marketed for their future development potential.

Colliers International's Tony Iuliano and Nathan Bingham are the marketing agents.

Fairfax paid $5.6 million for the property in 1999. It then invested $220 million building the existing printing press, which includes components from Germany and Switzerland.

The media company, which now also focuses on digital distribution, also plans to close a newspaper printing plant in Chullora, NSW, by mid-2014.

KPMG on the move

Professional services giant KPMG is speculated to be quitting its enviable Collins Street address - renowned within property circles for being one of the first offices to offer super-size (4000-square-metre) floor plates in the city's Paris end.

Sources say KMPG is in advanced negotiations to lease a brand-new office at Walker Corporation's Collins Square complex in Docklands. Collins Square is a multi-office compound being developed near Collins Street's western end - on the opposite side of the Southern Cross train line to Media House, headquarters of The Age. The two most valuable parts of Collins Square have already been developed and leased.

A Walker spokesperson declined to comment, while a KPMG representative confirmed it is looking for space but has not yet made a decision.

KPMG's current office, the former T&G Building at 161 Collins Street, on the south-west corner of Russell Street, is considered underdeveloped with just a 12-level building rising from a massive 5574-square-metre block. This pocket of the city, defined by the Property Council of Australia as Melbourne's eastern core, typically has lower office vacancy levels than other parts of the Melbourne CBD.

The former T&G Building is owned by JGL Investments, part controlled by the Liberman family.

In the long term, airspace is expected to make way for an office skyscraper similar or taller than the nearby 101 Collins Street (57 levels) and 120 Collins Street (53 levels), which were both developed about 20 years ago.

Showroom sold

Investor and developer George Saade has sold a showroom in Church Street, Richmond, for $8 million.

The asset, leased to Berkowitz Furniture, is a passive investment but has redevelopment potential in the longer term. Savills sold the asset on Friday after listing it for sale on Tuesday.

Aged-care upturn

A modern aged-care facility in Glen Waverley has been sold by a mortgagee in possession for $4 million.

The 49-room Autumn Care complex at 982 High Street Road returns annual rent of $320,000 and sold on a yield of about 8 per cent.

Selling agents Josh Rutman and Jamus Campbell from CBRE, with Cooper Newman's John Newman and Phil Kadletz, said the social infrastructure sector, including aged care, medical and childcare in particular, was seeing an upturn in investor demand as a consequence of low interest rates.

They are expecting about $4 million for another aged-care facility, Caulfield Manor, at 1019 Glen Huntly Road, also in Melbourne's south-east.

In July, Monash City Council controversially decided to sell to the private sector two aged-care assets, expected to boost council's coffers by about $14 million.

Spilling the beans

One of St Kilda's historic and ornate buildings has hit the market as a development opportunity. The former St Kilda Coffee Palace at 24-26 Grey Street, in recent years leased to a backpacker operator, is expected to sell for $7 million and may be replaced as a much taller apartment building or hotel.

The three-storey brick building, developed in 1870, is just 50 metres east of the Fitzroy Street retail strip. It sits on a 619-square-metre block and includes 1680 square metres of internal area, configured as 47 hostel rooms.

Any new owner can renew a lease to the Coffee Palace backpacking lodge, which pays annual rent of $425,000 on a lease expiring next April.

Reconfiguring or extending the building into a more sophisticated hospitality venue or a residential conversion are other options.

Kliger Wood's Grant McKenzie and Russell Meerkin are the marketing agents.

Bacash building

A dispute involving two exclusive restaurateurs was resolved in front of about 200 people at auction on Thursday.

Michael Bacash and Stefan Bradica's Domaine Investments sold the South Yarra building at 175 Domain Road for $4.5 million.

It is tenanted to seafood restaurant Bacash and returns about $150,000 in annual rent. On that basis, the asset sold on a low yield of 3.3 per cent. More than 70 more bids were made by seven parties at the auction.

The 290-square-metre, two-storey building sits on a 249-square-metre block opposite the Royal Botanic Gardens.

CBRE's Justin Dowers, Rorey James and Mark Wizel were the marketing agents.

Twitter: @marcpallisco
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