This article is from the Australian Property Journal archive
SYDNEY-based Rathdrum Properties has backed the fringe office market, securing a recently completed building in Melbourne’s Silicon Valley for $41.5 million on a 4.79% yield.
Rathdrum has bought the 2-6 Gwynne Street property from Roche Holdings in a deal handled by Colliers’ Peter Bremner, Rachael Clohesy and Alex Browne, in conjunction with Adrian Boutsakis and Luke Bisset of Teska Carson.
“Rathdrum Properties is delighted to have been able to secure the recently completely building with great facilities and local amenity,” Rathdrum Properties’ Richard O’Connor said. “It provides a solid platform to extend our office portfolio into Melbourne. We look forward to seeing the continued growth and demand in the fringe markets.”
Roche Holdings put the property on the market in October last year, the deal was signed just before the Christmas holiday.
Roche director Nick Roche said the family-owned company had numerous sites in the Cremorne area at various stages of planning approval.
“With several projects on the drawing board for Roche Holdings to be constructed and given the strength of the city fringe office market, the family felt the timing was right to sell this asset in a market starved of good quality investment offerings,” Roche said.
Bremner said the property attracted keen interest from a range of buyer groups including private investors, syndicates, institutions and offshore groups.
“With yields in prime city fringe markets like Cremorne now below 5% and capital value rates for brand new office buildings ranging from $12,000-$13,000/sqm, this is one of the most hotly contested markets in Melbourne and this recently completed building was highly sought after,” he added.
Clohesy said strong leasing activity and a consistently high calibre of occupiers in the Cremorne precinct had further enhanced the appeal of the property to a wide range of buyers.
Boutsakis said potential buyers were taken by the quality design of the building, amazing views and proximity to the Melbourne CBD.
“The aspects and views from each floor are some of the most amazing in Melbourne, so it’s little surprise that this property attracted significant interest from potential buyers,” he said.
At the same time, Rathdrum also snapped 570 St Kilda Road for $67.6 million from Terraplex, reflecting a fully leased initial yield of 5.41% and a capital value rate of $8,840/sqm.
The eight level office building comprises 7,647sqm and major tenants including Simonds Homes, Accolade Wines and ALM Williams Partners. The sale was handled by Cushman & Wakefield’s Leigh Melbourne, Nick Rathgeber, Mark Hansen and Josh Cullen along with CBRE’s Kiran Pillai, Scott McGlone and Hugh Thomson.
Melbourne said the new owners will be able to leverage and capitalise on significant rental upside over the medium term as the immediate precinct continues to benefit from the Alfred Hospital’s rapid expansion where it continues to take up space along St Kilda Road’s tightly held office market.
“This is the first $60 million plus asset to sell this year in Victoria and remains one of the most popular buildings on Melbourne’s most prestigious boulevard, with all major tenants re-committed.” Pillai said.
