This article is from the Australian Property Journal archive
COLLECTIVE Capital has picked up a Frankston office building with a defensive tenancy profile in Melbourne’s south eastern bayside region in a circa $20 million off market deal.
The five level building at 454-472 Nepean Hwy has 6,254 sqm of net lettable area with ground floor retail, and is on a 2,501 sqm site with three street frontages and parking for 142 cars. It sits on the corner of Wells St, adjacent to the headquarters for South East Water.
CBRE’s Mark Wizel and Josh Rutman brokered the deal of the largely government tenanted building, which sold 78% leased with a net passing income of nearly $1.24 million. The yield was not disclosed.
Wizel said the sale result reflected the property’s quintessentially defensive tenancy profile, a characteristic which has become highly sought after as forecasted challenges around the office tenant market continue to gain momentum.
“This was an astute purchase which delivered a very satisfying level of income security at a time when income security is at a premium across all types of investment classes.
“Interest in this and other defensive income properties, especially non-discretionary retail, has risen markedly in recent times and should continue to escalate whilst uncertainty remains.”
Rutman said investors were also responding to the growing trend of a decentralised workforce where office workers preferred to work either at or closer to home to reduce travel times without compromising productivity.
“Investors are seeking out opportunities where they can reposition buildings to cater for these changing worker needs in strategic locations which will be able to service a specific tenant catchment or industry.”
Director of national property investment group Collective Capital, Nicholas Thompson, who founded the organization together with Dale O’Dwyer, said the asset was “strategically targeted due to its very strong government and government-funded tenancy profile, which, during these uncertain times, will provide our investors with a high level of income security”.
The building’s highway location, within walking distance of Frankston railway station, and Bayside Shopping Centre had been a major factor in attracting tenants including NDIA, St Lawrence and Wise Employment.
CBRE’s head of suburban office leasing, Gianni Macdonald, said whilst lease transactions had slowed, Melbourne’s metropolitan office market had seen a significant increase in enquiry from government tenants looking for fitted tenancies close to train stations.
