This article is from the Australian Property Journal archive
THE prominent Victoria Police St Kilda Rd complex has been put on the market and it is expected to attract strong national and international interest looking to develop the prized site.
CBRE’s Mark Coster, Mark Wizel and Josh Rutman and Dawkins Occhiuto’s Walter Occhiuto and Andrew Dawkins have been appointed to 412 St Kilda Rd.
The property is owned by a syndicate managed by IGR Property Group, which bought it for $42 million in 2009 from ING Office Fund. IGR has put the property on the market after Victoria Police decided not to extend its lease beyond mid-2016.
The property is tipped to fetch around $60 million. If it sells, it would be the second largest site sale in Melbourne this year, behind 93-119 Kavanagh St Southbank, which changed hands for $145 million last month. Dynasty Falls, a company backed by Mario Lo Giudice, Antonio Lo Giudice, Joel Freeman and Bella Gurevich, sold the commercial car park site to Malaysia’s PJ Development Holdings Berhad. Thomson Geer’s partner Eu Ming Lim acted as the legal adviser and Knight Frank’s Paul Henley was the agent.
CBRE’s Mark Coster expects the sale campaign for 412 St Kilda Rd will attract developers as well as investors.
The property has three street frontages and is surrounded by the Royal Botanic Gardens, the Shrine of Remembrance, as well as Albert Park Lake and Port Phillip Bay. There is a 21-level office building comprising a net lettable area of 16,285 sqm, with a seven-level car park and 14 levels of office space from levels six to 19, on a 1,567 sqm site.
Coster said the potential for a residential conversion is expected to drive considerable interest, with St Kilda Rd having proven to be one of Melbourne’s most sought after apartment locations.
The site holds a Commercial Zone 1 zoning under the Port Phillip Planning Scheme, so it is suitable for a mixed use development.
“The sale would provide prospective purchasers with a rare opportunity to acquire a commercial building that was presently securely leased, with significant potential for a future high rise residential development.
“The building is located at the prestigious ‘city-end’ of St Kilda Rd, in a prime location for both commercial and residential accommodation given its position, outlook and surrounding amenity,” he added.
“It has proven to be an outstanding office asset, but would also suit residential redevelopment, conversion to hotel/ serviced apartments or strata sell down of the individual office suites subject to the relevant planning approvals,” he continued.
Although Coster has not ruled out strong interest from investors who intend to continue using the property as an office, because space within St Kilda Rd is becoming scarce.
“A series of planned residential conversions will put St Kilda Road’s office vacancy rate in single figures by 2017,” Coster said.
According to Dawkins Occhiuto’s Walter Occhiuto, an average of 13,267 sqm of office stock is expected to be removed annually over the next five years, which means the St Kilda Rd market is well placed in the short to medium term to see growth in both net effective rentals and capital values.
Occhiuto said one of the attractions would be the current lease to Victorian Police, which runs until July 31 2016, allowing access to the site from August 2016.
“This provides a secure, short-term income from one of the most creditworthy tenant covenants available.
“Developers and investors alike can benefit from this holding income whilst establishing their plans for the building,” Occhiuto said.
Expressions of interest will close Thursday, 31 July 2014 at 4pm.
Property Review
