This article is from the Australian Property Journal archive
FOUR properties at 420 Collins Street in the Melbourne CBD have sold for $11.21 million, with high levels of interest reflecting strength of demand from owner occupiers and investors.
The properties at Ground, Level 1, Level 2 and Level 9 of 420 Collins Street, included three office floors and one ground level retail showroom, with the sale price reflecting a building rate of $8,236/sqm, setting a building record and a 55% premium on the sale of Level 6 in the same building in April this year.
Nick Peden, Josh Rutman, Tim Carr and Mingxuan Li from JLL exclusively managed the international expressions of interest campaign for 420 Collins Street, on behalf of partners at Grant Thornton Australia in their capacity as the Agents for the Mortgagee.
“There’s no doubt that transaction volumes in the Melbourne CBD are lower than the long-term average, however this most recent deal is evidence of the significant current demand for well-located Melbourne CBD real estate,” said Peden, director and head of Melbourne CBD sales at JLL.
The public sales campaign generated a mix of local, interstate and international interest, with over 200 buyer enquiries garnered and 30 offers of purchase.
“To generate 30 offers to purchase highlights the depth of interest and the current scarcity of opportunities to purchase,” added Peden.
“The sale of 420 Collins Street is a clear signal of the strong fundamentals of the Melbourne CBD market driving the immense appetite to purchase from the wider buyer market. It was most interesting to see investors compete strongly with owner occupiers, particularly when you consider that the property was offered with vacant possession.
After competitive bidding from owner occupiers and investors both locally and off-shore based, the successful buyer was a local investor who purchased all four properties in-one-line.
With the four properties in providing a total building area of 1,361sqm, which was previously occupied by Victory Offices.
“We are in discussions with a number of long-term holders of office assets who are assessing the best avenue for maintaining the value of their properties given the mounting challenges with higher vacancy and increasing holding costs such as Land Tax,” said Josh Rutman, executive director and head of capital markets at JLL, Victoria.
Some have looked to partner with groups that have expertise in the repositioning of office buildings to ensure tenant retention and drive better returns. Others have simply elected to offload as demand for these buildings remains robust.”
Also on Collins Street, Sterling Global recent purchased number 623 with a town planning application being lodged for a future mixed-use development of a $420 million 42-level development designed by Carr.
With further activity in the Melbourne CBD over the last month including Lendlease receiving approval for a 10-storey retail and office tower above the new underground Metro Tunnel Town Hall station at 25 Swanston Street and Japanese real estate company Daibiru is investing a 50% share in Mirvac’s 46,000 sqm under-construction tower at 7 Spencer Street.
