STRATA offices have carved out an increasingly popular niche in the CBD office market among owners and investors, with overseas interests also attracted to the sector.
The Melbourne CBD strata office market now comprises 246,000 square metres, or 6 per cent of the total 4.1 million sq m of office accommodation, according to CBRE's latest strata office report. That amounts to more than 1800 strata office properties in the CBD.
Senior research analyst Erin Obliubek said the Melbourne strata office market was the second largest in Australia behind Sydney.
CBRE manager, city sales, strata division, Tom Tuxworth, said average sales turnover in the CBD was 120 strata office properties per annum.
Owners of older-style buildings often refurbished and subdivided their buildings, offering them as strata offices, a more profitable strategy than selling the building as a single asset.
An example was 140 Bourke Street, bought in 2004 by Drapac Property Group, and refurbished and put on the market as strata offices. Sixty per cent of the building had been sold, including the recent sale of 300 sq m to China development company Yucai Group.
Yucai Group leases an office on La Trobe Street, but the president, Zhao Ping, said the group had been looking for a strata office in the CBD's east end for some time and the Bourke Street building had given it the flexibility to do its own fitout, with the prime location a key reason to make it the group's new head office.
Mr Tuxworth said investors and owner-occupiers could use their self-managed superannuation funds as a result of the relaxed laws surrounding borrowing for purchase and renovation.
"These changes have had a positive effect on the market's sentiment towards strata office investment, as there are a number of taxation benefits associated with this strategy," he said.