This article is from the Australian Property Journal archive
PACE Development Group is seeking to capitalise on the upsurge of build-to-rent market activity along Melbourne’s inner northern suburbs, putting a permitted 1.32-hectare North Melbourne site up for sale with expectations of upwards of $45 million.
The property, at 68-102 & 103 Alfred Street and 87-105 Racecourse Road, has planning permission to deliver more than 54,000 sqm of net lettable area, likely to be over 800 apartments over three stages, on land with commercial 1 and mixed-use zoning that provides flexibility for modified use outcomes.
Pace is trying its luck after US Group Hines recently bought more than 3,000 sqm of land for a $230 million build to rent facility, while close by Local and Macquarie recently bought 350 Macaulay Road with plans for 424 build-to-rent units, and alternative residential housing developer Assemble Communities has collected several sites.
The deals also prompted a local family to put their 7,811 sqm North Melbourne landholding to the market after receiving offers of $50 million.
“Pace has seven projects commencing construction in 2022. Given the scale of the site and momentum of build-to-rent activity in the precinct, timing is right to divest,” said Pace Development Group’s chief operating officer, James Simpson.
“A divestment will enable us to focus on the delivery of our existing build-to-sell and commercial projects, while bolstering investment in new development sites that provide a sustainable pipeline of future delivery.”
The Alfred Street and Racecourse Road property is across from Flemington Bridge train station and the number 57 tram, providing direct access to the Melbourne CBD and the hospital and university precincts, and is one kilometre away from the future Arden Metro Tunnel station.
Stonebridge Property Group’s Julian White and Chao Zhang, and CBRE’s David Minty, Nathan Mufale and JJ Heng, are marketing the property via expressions of interest, acting under instructions from transaction manager, Advise Transact.
Minty said that with nearby Kensington being the first mover and most active CBD fringe build-to-rent market, “The Village” will offer buyers a “de-risked gateway site closer to the CBD at a more attractive value proposition”.
“We believe that Melbourne is facing a shortage of rental accommodation as we return back to normal, particularly in key inner-city locations such as North Melbourne, where the majority of the population are young renters who require to live and be in proximity to universities and places of work,” said Luke Mackintosh, who leads the build-to-rent arm of the real estate advisory team at EY.
“The current residential vacancy rates in North Melbourne have returned back to pre-COVID levels and we anticipate that net overseas migration of students and skilled workers will return to the historical levels observed in Victoria.
“This will continue to create a scarcity in rental stock with the private residential development sector facing significant difficulties in delivering new housing due to a lack of FIRB investors entering the market, difficulty in financing projects and rising construction costs.”
Melbourne’s apartment market is headed for a supply shortage as completions plummet to their lowest levels in 11 years, according to Charter Keck Cramer.
Expressions of interest close Wednesday, 29th June.
Pace sells suburban offices
Meanwhile, Pace has entered into a $30 million-plus joint venture ownership arrangement with fund manager Vantage Property Investments for a speculative office development in the eastern Melbourne suburb of Hawthorn East.
Vantage will buy the 12-floor project at 9 Montrose Street once Pace completes construction, expected by the end of 2023.
