This article is from the Australian Property Journal archive
FORZA Capital has sold Epson’s new Melbourne headquarters for $6 million on a tight yield of 4.65% as demand for metropolitan offices continue to grow.
Fitzroys director Paul Burns negotiated the off-market sale of 90 Camberwell Rd Hawthorn East to a local private investor.
The sale price reflects a strong building rate of $9,524 per sqm and land rate of $7,125 per sqm.
Burns said the property sold as a passive investment to a local buyer.
“The purchaser saw immense upside in the secure terms of the lease to a blue-chip tenant,” he said.
Zoned Commercial 1, the property also offers excellent redevelopment potential for a much higher density development in the future – for either residential or commercial uses. Burns said investors are continuing to actively source well-located and income-producing assets despite COVID-19.
“There is still strong demand for income-producing assets, particularly given the historically low official cash rate and volatility in the stock market.
“Commercial property is viewed as a stable alternative, and Melbourne’s reputation as an investment safe haven remains a compelling factor for assets such as this,” he added.
The fully refurbished 630 sqm office and showroom building is on an 842 sqm site with 14 parking spaces. Epson Australia Pty Ltd is currently fitting out the premises and recently signed a 5+5+5-year lease returning $279,000 per annum with 3.75% annual increases.
Burns said Melbourne’s inner-east and other suburban and metropolitan markets would continue to attract the attention of local and offshore investors alike, as the impact of COVID-19 creates more demand for offices closer to where employees live, thus enhancing their lettability.
“Even if a small percentage of CBD tenants choose to move away from the high density CBD, this will have a big impact on the shallow pool of suburban office stock that is available and is likely to result in upward pressure on rents.
“Financial considerations in the current climate may encourage companies to take up space in the suburbs, which offer lower rents,” he continued.
Fitzroys has recorded a strong uptick in enquiry from a range of tenants looking to move to the growing office markets of Hawthorn, Kew and Camberwell, and strong transaction results have been witnessed in these locations.
