This article is from the Australian Property Journal archive
The Illoura House site on a one acre St Kilda Road corner block has been listed for sale, with approval for an 18-level mixed-use building that was subject to an in-principal deal with hotels giant Marriott.
It is nearing one year since Woodlink unveiled plans for a $360 million tower at the 424-426 St Kilda Road. Drawn up by architects Bates Smart, the designs included 163 apartments and 176 hotel rooms that would make up the first Marriott Executive Apartments offering in Australia.
Currently, the 4,645 sqm site has a building area of 12,659 sqm over six levels and basement parking for 144 cars. An agreement with the building’s tenants – the building is around 85% vacant – would allow development or a refurbishment to commence almost immediately.
CBRE’s Mark Wizel, who is marketing the property with colleagues Lewis Tong and Josh Rutman, said the property offers strong prospects for refurbishment and re-leasing of its as a longer-term investment in an increasingly tight office market, while developers/land bankers may see the value in the current building envelope that could be enhanced for a development that would take advantage of the very strong office market.
“I have no doubt we will also see significant interest in the site from developers of hotels and mixed use projects out of Asia, especially given the interest already shown by Marriot which had a deal in principal with the vendor to take the hotel component of the approved project,” Wizel said.
He said strong leasing demand had driven the improved strength of the commercial office market, resulting in a number of buildings transacting at well above $10,000 per sqm and has provided a strong reversion for developers to be looking beyond residential projects.
The agents would not be drawn on the price, but market sources suggest the site could fetch north of $70 million.
The site is positioned near Fawkner Park, the Royal Botanic Gardens and Albert Park, and could offer views towards the city, Shrine of Remembrance, or Albert Park Lake and Port Phillip Bay.
Tong noted developer John Beville’s recent $163 million sale of the nine-level office tower at 509 St Kilda Road, saying that he “almost doubled his money on that sale in just four years and we may well see a similar result here”.
Recent Cushman & Wakefield research showed the St Kilda Road office precinct has seen capital values rise by between 90% and 115% over five years.
Late in 2017, Perth-based syndicate Lester Group offloaded 324 St Kilda Road for $42 million after buying it only four years earlier for $22 million. More recently, Chip Eng Seng sold its 11-storey, 10,459 sqm 420 St Kilda Road office building for $68.84 million after just one week on the market, representing a $23.56 million capital gain on its purchase price in 2013.
Further down the boulevard, Lian Beng Group and KSH Holdings sold the 596 St Kilda Road site for $34 million, with approval for a 19-storey, 170-apartment development, less than two years after acquiring the site for $25 million.
According to a Fairfax report, the Werdiger family sold 424-426 St Kilda Road at the end of 2013 for around $45 million. The property is being offered via expressions of interest closing in mid-April. Woodlink still has the Illoura House project listed on its site as “on market soon”.
Australian Property Journal
