A chance to be the ATO's landlord

THE long-term inner Melbourne home of the Australian Taxation Office (ATO), which has been joined by recently committed tenant Honda, has hit the market.

The seven-level Moonee Ponds building at 6 Gladstone Street was purpose-built for the ATO, which has been the anchor tenant its completion in 1992. It has just committed to another 10-year term over the vast majority of the 20,021 sqm building, taking occupation out until April 2032, and bringing the building’s weighted average lease expiry to 8 years.

Owner Cyberra Investments recently undertook a refurbishment of the building as it sought to re-lease more than 6,000 sqm of space.

Charter Hall had owned the building from 1993 until selling in 2014 for a reported figure of $83 million.

Now, it is for sale through Cushman & Wakefield’s Leigh Melbourne, Nick Rathgeber, Josh Cullen and Mark Hansen, via expressions of interest closing 20^th July.

“The ATO has a strong track record for renewing multiple terms in one place of occupation and extensive refurbishment works have taken place throughout the ATO tenancy and common areas, updating this institutional-grade office building with scope for immediate upside,” Melbourne said.

The building is on a 5,345 sqm site with basement parking for 88 cars.

According to Cushman & Wakefield, in 2021 capital into Melbourne’s fringe outperformed the CBD for institutional-grade office sales and about $1.3 billion was invested in Melbourne’s fringe compared to $737 million in the CBD, representing a 63% to 37% split.

Recently, German fund manager Real IS Group paid $73.5 million for 11 Wilson Street in South Yarra, 2-6 Gwynne Street in Cremorne purchased by Sydney-based private investor Rathdrum Properties for $41.5 million, and Irongate bought a 50% share in 510 Church Street, Richmond for about $130 million.

Colliers recorded $1.5 billion in sales across the metropolitan office market.

Across the suburbs, Growthpoint has made dual purchases of office buildings in 2022, most recently acquiring the state Government Service Office building in Dandenong for $165 million from the Grollo family on a 5.3% initial income yield. In March, the ASX-listed group picked up a recently built Hawthorn East building for $125 million.

Last month, The Frasers Logistics & Commercial Trust spent $60.25 million on a multi-tenanted Mount Waverley office asset.