Capital Gain

Developer gets first dibs on office market
By · 7 Dec 2013
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7 Dec 2013
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Developer gets first dibs on office market

Eleven months after the first residential application was lodged, a submission to build Fishermans Bend's first office skyscraper has landed on the desk of Planning Minister Matthew Guy.

The application - the 18th following a rezoning of 240 hectares last year - seeks to replace a nondescript low-rise showroom at 199-201 Normanby Road with a 36-level building that will include 28,200 square metres of office and retail space.

Lemon Baxter director Chris Curtain estimates the office space could lease for more than $350 a square metre annually.

This rent makes an office proposal attractive to developers, who are this year being outmuscled by residential builders for sites around other inner-city precincts, such as Docklands and Southbank.

The proposed Normanby Road complex will also include 262 flats, but only 174 car-park bays. The property is next to the City Jeep dealership, until recently occupied by long-term tenant Jefferson Ford.

Since the first Fishermans Bend application in January, almost 30 residential skyscrapers have been proposed, with some land owners seeking to build villages of two or more towers above podium-level shops.

Most of the proposed buildings seek to rise between 30 and 50 levels, with three of them slightly higher. Like many other proposals, the 199-201 Normanby Road application seeks to waive minimum car-park requirements.

Some developers who lodged applications mid-year told BusinessDay they were expecting to market the first Fishermans Bend flats by Christmas.

Instead, in October, the state government released a revised planning document containing high-rise buildings to the Fishermans Bend pocket to be known as Montague, immediately south-west of the Melbourne Exhibition Building.

Upon completion, the multibillion-dollar urban infill project will include a spine along Plummer Street - serviced by light rail - connecting the city centre with Sandridge Beach.

Right chemistry

Cedar Woods has paid $25.3 million for the former Sigma Pharmaceuticals manufacturing and warehousing complex in Clayton. Knight Frank director Ken Smirk brokered the deal, announced to the ASX on Friday afternoon.

The 6.5-hectare block with access to Centre, Haughton and Main roads was recently rezoned for residential use. Mr Smirk said about 560 dwellings could be developed on the land.

Agency buys in

Burgess Rawson is the latest real estate company to practise what it preaches to investors.

The city-based agency has bought the seventh level of a newly refurbished 14-storey office at 140 Bourke Street, part of which it plans to occupy.

CBRE, representing the vendor, Drapac, now has just two small strata suites left to sell of the 7200-square-metre office and retail complex - the former Hoyts Cinema, which the local developer acquired in 2004. Ed Wright and Tom Tuxworth are representing Drapac.

Chinese property company AXF Group recently acquired the top level of the 140 Bourke Street complex, and that included some valuable air space, which is expected to be developed in the medium term.

AXF subsequently sold the Docklands office it owner-occupied to the Australian Labor Party for $3.4 million.

This year John Piccolo, of agency Woodards, bought an office building near Camberwell Junction in Melbourne's east from the Victoria Teachers Mutual Bank.

It's a knockout

The auction of a prominent eastern suburbs corner has been cancelled after an Asian investor made a knockout bid a week before the planned sale.

The distinctive cream-coloured curved building, known as Stotts Corner, at the busy junction of Glenferrie and Riversdale roads in Hawthorn, is understood to have sold for about $4.5 million, against price expectations of $3.5 million.

On a 696-square-metre block, the two-storey office is leased - the ground floor to Stotts pharmacy; the upper level to Alpha Autism. Optus has a long lease on the rooftop.

Known as 524-532 Glenferrie Road, the property is only a few hundred metres from Hawthorn Town Hall and has longer-term development potential (the historic building is not protected by a heritage overlay). Even as a passive investment, CBRE selling agent Rorey James said the sale price equated to a strong yield of about 5 per cent.

Mr James marketed the building with Mark Wizel and GormanKelly's David Minton and Robert Kelly.

Crown for Kings Way

Another skyscraper is set to loom over Kings Way near the busy intersection of the West Gate Freeway.

An application has been lodged to build a 55-level residential building with 295 flats and 108 car parks at 84-90 Queensbridge Street, on the corner of the Kings Way bridge.

The tower would replace a double-storey office and include about 300 square metres of commercial space at ground level, accessed by buses, trams and cars.

Several apartment towers have also been proposed for wedge sites abutting the West Gate Freeway. At the site that divides 84-90 Queensbridge Street from the West Gate Freeway - the former JH Boyd Girls High School - a portion of land has been earmarked for a 30-level residential building.

School selloff

Developer Central Equity has paid private college Westbourne Grammar a speculated $10 million for a 12-hectare piece of land abutting the school's Truganina campus.

The block at 350 Sayers Road, bordering Skeleton Creek, had been earmarked to become school sports facilities.

Westbourne owns neighbouring sites at 340 Sayers Road, part of which has been developed as a middle school, and 300 Sayers Road, its biggest campus.

Westbourne also operates a Williamstown campus on The Strand - considered to be the western suburb's most expensive street.

The college has tried to offload 350 Truganina Road over the past decade.

It is expected that Central Equity will replace the block with a housing estate. In 2010 it paid $24 million for a 20.5-hectare farm in nearby Point Cook, near its Featherbrook Estate.

Biggin Scott Land director Andrew Egan said it was apparent that land players were back in the market after a hiatus in 2012.

"We are increasingly seeing developers once again prepared to pay up to $1 million per hectare for sites without planning risk that can produce immediate income."
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