CAPITAL GAIN

VICTORIA Police has opted to stay at its St Kilda Road location for another three years, further postponing its long-mooted search for new premises.

Capital Gain can confirm the police force has extended its lease over 412 St Kilda Road until mid-2013.

Recent speculation had suggested Victoria Police was looking at taking the entire 30,995 square metres at 321 Exhibition Street, which will shortly be vacated by Australia Post when it moves to Southern Cross West Tower at 111 Bourke Street.

Debate over the future of 412 St Kilda Road and the police presence there heightened following ING's sale of the building to developer IGR Property Group for $42 million in June. Industry sources say the location is ripe for conversion or redevelopment into apartments. IGR Property was unavailable for comment.

Victoria police has long hoped to consolidate the St Kilda Road locale (16,000 square metres) and its current headquarters at 637 Flinders Street (23,000 sq m) into a single complex of about 50,000 sq m. The search has been complicated by a lack of suitably sized and located sites, the cost of a new build, and over-lapping lease periods.

In 2007, Victoria Police renewed its Flinders Street lease in the World Trade Centre until 2015. Its space requirement, which has been circulating in the market for years, was then reduced to about 25,000 sq m. A police spokeswoman declined to comment on any future property plans. A representative of Crowell Group, owner of 321 Exhibition Street, also declined to comment. The building will soon undergo a major refurbishment that is expected to see it achieve a five-star Green Star rating. The Australian Taxation Office is expected to shortlist the building as part of its search for

25,000 sq m of office space.

Crisis fizzles out

THE feared blow-out in subleasing vacancy is shaping up to be the crisis that never was, as a string of recent has deals soaked up nearly 8500 square metres of space in three prominent CBD buildings.

Troubled banking giant Citigroup recently offloaded three floors in 120 Collins Street, with IT group Alcatel-Lucent taking 1200 sq m and Morgan Stanley Smith Barney and consultancy firm Renewtek splitting a floor of 1600 sq m. Regulator the Australian Securities and Investments Commission opted for a direct lease over another 1600 sq m held by Citigroup.

ASIC has taken a further 1731 sq m sublease in 101 Collins Street, which had been occupied by Goldman Sachs JBWere. In Freshwater Place, the 2300 sq m held by OZ Minerals has been taken over by SP AusNet.

CB Richard Ellis reports there were 55,491 sq m of sublease space available in the central business district in August, down 20 per cent from June. It peaked at 74,500 sq m in April.

While still historically high, the supply level is a far cry from the grim predictions made in the early days of the global financial crisis, when subleasing vacancy was tipped to explode as companies shed staff and rationalised office space to cut costs.

The decline is being attributed to the cheaper than market rentals on offer. Jones Lang LaSalle and CB Richard Ellis, which were responsible for many of these deals, declined to comment on the rents achieved.

Elsewhere in the CBD, Jones Lang LaSalle has negotiated a deal that has seen NAB take 1640 sq m in 8 Exhibition Street. Investa also reports that the Future Fund has leased 600 sq m in 120 Collins Street.

Start of a Dynasty

LAS Group's $110 million project, 206 Bourke Street, is slated to be the home of a local incarnation of top Shanghai restaurant Dynasty.

Industry sources say Dynasty's Chinese owner will spend about $4.5 million fitting out a 1100 square metre spot on the first floor of the five-level retail and office precinct.

Lachlan MacGillivray, Colliers International's Victorian director of retail, declined to comment on the deal. Asking rents are reportedly to be about $600 to $800 a square metre.

Dynasty, which specialises in Cantonese cuisine, will join former lord mayor John So's Dragon Boat restaurant and The Bund Chinese restaurant.

Collins Street cred

A LANDMARK Collins Street office building is set to go under the hammer next month in a sale expected to fetch in excess of $7 million.

The National Trust-listed London and Lancashire Building at 400 Collins Street is being sold by the Angliss family. Angliss Benbow Properties bought the property for $920,000 in 1979. It was sold in 1999 to an Angliss trust beneficiary for $4.35 million.

The seven-storey building the original two levels of which date back to 1865 is being offered with vacant possession. There are five levels of office space, with a net lettable space of about 2000 square metres plus a rooftop terrace and penthouse.

"Properties of this size on Collins Street are rarely offered to the market and, irrespective of market conditions, the opportunity to own a freestanding retail and office building on Melbourne's most prized street will lure buyers," said Mark Wizel, CB Richard Ellis' associate director of city sales,. The auction is on October 23.

Unipark finds favour

A PRIVATE investor has paid $3.25 million for a strata office unit in CGA Bryon's Unipark development in Clayton. Medical supplies company ConvaTec occupies 619 square metres of a 937 sq m ground-floor unit, with the remaining vacant space offered with a rental guarantee. The yield was 8.8 per cent. Knight Frank director Ken Smirk said about $17 million worth of sales have been done in Unipark in the past five months.

Marketing aces

THE Real Estate Institute of Victoria has announced the winners of the 2009 commercial property sales and leasing marketing awards.

It was a three-way tie for the Best Sales Campaign with a budget of more than $25,000, with CB Richard Ellis winning for both its Rivoli cinema and Westin hotel campaigns, and Jones Lang LaSalle for 612-620 Lonsdale Street. Lemon Baxter won for best sales campaigns in both the sub $5000 and $5000-$25,000 budgets, for properties in Port Melbourne and South Melbourne.

In the leasing awards, Colliers International won Best Leasing Campaign in the above $25,000 budget category for 717 Bourke Street, as well as the mid-range budget award for 161 Collins Street. Beller Commercial won the sub $5000 category for its retail campaign in Hawksburn village.

The winners are selected by three anonymous industry professionals, and the

85 campaign entrants are judged on creativity, use of available media, and budget.