This article is from the Australian Property Journal archive
THE inner west Melbourne office building home to the Victorian government’s Department of Families, Fairness and Housing is on the market with expectations of more than $37 million, representing of the few leased investment opportunities this year in the metropolitan office market.
Known as Quay West, the Footscray building at 71 Moreland Street spans three levels with 6,144 sqm of offices, an on-site café and basement parking for 118 cars, and sits on 4,140 sqm of land with corner frontage on the Maribyrnong Riverfront.
The property currently generates an approximate net income of $2.4 million with 3.5% annual increases on a recently renewed five-year lease with no options.
CBRE’s Scott Orchard and Tom Ryan, together with Colliers’ Rob Joyes, Thomas Blencowe and Anna Cavar, have been appointed to manage the sale process on behalf of the private family owner. Going back a number of years, it was owned by property fund manager Lachlan REIT.
“This is a compelling investment opportunity following a recent five-year lease renewal, which provides stabilised income security akin to a government bond,” Orchard said.
He added that with no further option there is also significant rent reversion as well as future development potential, as the building occupies an “underutilised” Activity Centre Zone site four kilometres from the CBD.
The 71 Moreland Street building won a sustainability award recognising its performance upgrades due to the installation of a 100 kWh solar array system aligning with the Victorian government’s emission reduction targets. It has a 5.5 star NABERS Energy rating and a clear and confirmed pathway to 6 stars, according to the agents.
The property has dual entrances with large, regular shape floor plates and a central lift core providing flexibility for different tenancy configurations, 360-degree natural light and views of the immediate parkland, Maribyrnong River and the CBD.
Blencowe said, “It’s an exciting asset to take to market with no similar offerings available, with domestic and offshore buyers continuing to hunt for assets offering quality fundamentals.
“71 Moreland is a trophy asset given its superior tenant covenant, repurpose potential and gateway location to one of Melbourne’s fastest growing and gentrifying fringe suburbs.”
Suburban office transactions have largely dried up in line with the broader commercial real estate market, which is making its way through a challenging period of price discovery. An Abbotsford office building has just sold for $19 million to be converted into self-storage.
Footscray is home to more than $30 billion of committed government spending through the new Footscray Hospital, rail upgrades and Westgate tunnel project.
Expressions of interest for 71 Moreland Street close 15th June.
Two years ago, Centuria Capital Group spent $224 million acquiring the A-grade Footscray building at 1 McNab Avenue, occupied by a number of Victorian government agencies.
