East Melbourne tower positioned for remodel

An East-Melbourne office building bought 13 years ago for $6 million, has almost quadrupled in value, selling this time for $22.7 million – the biggest suburban sale reported this year.

An East-Melbourne office building bought 13 years ago for $6 million, has almost quadrupled in value, selling this time for $22.7 million – the biggest suburban sale reported this year.

The 12-level, 6382-squaremetre office at 176 Wellington Parade was sold by administrators PPB Advisory representing failed company Break Fast Investments. PPB boosted the occupancy of the building to 95 per cent before listing it in May.

The new owner, local syndicate Vantage Property, is expected to retain the investment, which returns about $2 million in annual rent. The asset was sold on an 8.8 per cent market yield. Throughout the marketing campaign it was speculated that the recently renovated office could undergo a residential redevelopment in the longer term. The site is opposite Yarra Park and near the eastern edge of the Fitzroy Gardens, walking distance to the CBD.

Colliers International’s Jeremy Gruzewski, who marketed the building with Peter Bremner, said 10 formal offers were received.

The building is almost atop the Jolimont railway station. Richmond and Parliament stations are walking distance.

Mr Bremner said offices capture views over the MCG to the Yarra River and over the neighbouring Hilton Hotel to the CBD. He said many of the current tenants migrated from the CBD.

Typical floorplates in the building are about 600 sq m. The asset includes 88 car parks.

Commercial selloffs

Two prominent developers are selling the commercial components of larger residential-based redevelopments in Melbourne’s suburbs. At Camberwell Junction, Sydney developer FKP has listed for sale a heritage-listed former bank, now leased to the Meat and Wine Company restaurant, and returning $170,000 in annual rent. FKP replaced land around the historic building, for years a car dealership, with a controversial residential village now known as Aerial.

After the 2008 economic downturn, FKP lobbied the Victorian Civil and Administrative Tribunal to increase the number of flats in the multi-tower village by 40 per cent to 144. The highrise apartments were a first for exclusive Camberwell.

Savills director Clinton Baxter, marketing the site with Nick Peden, said the two storey, 250-square-metre retail space was expected to sell for about $3 million. After any sale, FKP will retain only a few shops within Aerial – valuable assets, being at the tail of the busy Burke Road shopping strip.

In South Yarra, developer Michael Yates can expect about $7 million from the sale of a 109-bay car park, the lowest five levels of a 19-level office tower constructed in 2009.

Savills is also handling the sale of the car park – which derives a commercial revenue, about $267,000 last financial year. Each bay is individually titled, should the next owner choose to profit from a selldown. A South Yarra car bay is now valued at about $95,000, according to Mr Baxter.

A local developer with the foresight to invest in Queens Road 47 years ago is ready to cash in, his small block of flats on a 2329-square-metre lakeside block speculated to sell for more than $15 million.

Queens Road, which connects Kings Way, South Melbourne, to Dandenong Road, Prahran, and Fitzroy Street, St Kilda, includes about 80 lots, of about the same size, most of which abut the eastern edge of Albert Park Lake parklands. Like St Kilda Road, which runs parallel, Queens Road is zoned Melbourne with a postcode 3004. Queens Road towers, however, capture panoramic views of Port Phillip Bay beyond the lake that can never be built out.

The block at 77 Queens Road includes a three-level 36-unit apartment complex developed soon after 1966.

The owner resisted selling off each unit separately despite individually strata titling them in 1984.

The block returns $630,000 in annual rent but is for sale with concept plans for a 13-level apartment tower.

Future owners may consider building more than one skyscraper on the supersized block as is being considered by owners of similar sized blocks on St Kilda Road. Colliers International’s Bryson Cameron is marketing

77 Queens Road.

Two doors up, developer Evolve, part-owned by former Melbourne lord mayor Ron Walker, is replacing the former Suntory Japanese restaurant with a 13-level, 228-unit complex, Monarc.

Evolve is reported to have paid $15 million for 74 Queens Road in late 2010.

Earlier this year, Dodo founder turned property developer Larry Kestelman paid $21.4 million for a 2323sqm block at 10 Queens Road, with a 19-level office tower. In February developer Hallmarc paid $13 million for

a rundown low-rise office at 14 Queens Road.

Heidelberg rises

Heidelberg is the latest suburb on track to establishing its own skyline, with plans for a 10-level, mixed-use building mooted for a site at 112-120 Burgundy Street, at the centre of the suburb’s popular retail strip.

The 780-square-metre block is supersized, given the pocket is quite dense, and is also near the Warringal Shopping Centre and several hospitals.

The permitted project allows for three shops at ground level, 49 car spaces within two levels of basement car parks, and 50 apartments above.

In a show of how fast planning permissions have moved in the suburbs, the site is next door to a near-new mixed-use building, permitted to rise four levels.

The 112-120 Burgundy Street site and permit is expected to hit the market for sale next month with price expectations of about $4.5 million. Vinci Carbone is representing the owner.

FJs gone gone gone

Another footprint of defunct clothing manufacturer and retailer Fletcher Jones is set to disappear from a major shopping strip. The retailer’s former space at 574-576 Burke Road in Camberwell has been leased to clothing retailer Sportscraft, whose closest nearby outlets are at Chadstone, Doncaster and Glen Waverley.

Tamara Gross of Gross Waddell said the 188-squaremetre portion of the building at the front, with access to the prime retail strip, leased for $230,000 a year, or $1223 per square metre a year.

The 93-year-old Fletcher Jones business famously went into administration in December 2011, on the same day shoppers queued to access British-based retailer Topshop, which opened its doors in Australia in South Yarra.

Fletcher Jones’ prominent site at 1 Queen Street, on the north-west corner of Flinders Street, opposite the railway station and Yarra River, was sold last November to a Malaysian residential developer for $11 million.

Six months earlier Geelong’s historic Fletcher Jones building in Moorabool Street was listed for sale with vacant possession, asking about $1 million.

Email: marcpallisco@gmail.com Twitter: @marcpallisco

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