Office buildings to attract slew of investors and occupiers
Following several significant leasing and sales results in 2019, the owners of three adjoining Melbourne commercial buildings have elected to take them to market, despite recently achieving a major planning permit across the combined site.
The properties, clustered on the corner of Spencer and Jeffcott Streets in the north-western corner of Melbourne’s CBD, will be offered individually or as a whole by CBRE Melbourne Middle Markets agents: Mark Wizel, Josh Rutman, Lewis Tong and Scott Orchard.
Planning permits for a hotel and mixed-use development project were recently achieved across the three properties – comprising around 30,000sqm* of buildable area – which is also expected to attract the attention of larger domestic and international development groups.
The largest of the assets, the former Sands & McDougall building at 355 Spencer Street, is an historic, 7,363sqm* corner office building that once housed Melbourne’s leading printing and publishing firm for well over a century.
Sands & McDougall was best known for its annual Directory of Melbourne publication – a near encyclopaedic book that captured the identity and address of every business in Melbourne – which ran from 1862 to 1974. The company’s main printing house was located within the building and the proud horse logo still adorns the façade.
355 Spencer Street features large open plan floor plates and 360-degree view corridors, as well as a central light well and it offers a range of floor plate configurations as part of a wider refurbishment program.
Mr Wizel commented; “The repositioning and rejuvenation of older character buildings has become extremely lucrative in recent years, and this asset is perfectly placed to capture unsatisfied tenant demand for unique, but well-located, accommodation.”
In a similar transaction of a heritage building in late 2019, 22 William Street, known as Swann House, sold for $52,000,000 which will see the buyer embark on a refurbishment program, targeting rents of over $700/sqm.
“With office vacancy at record lows and the residential market also showing strong signs of recovery, there’s little wonder why investors are showing such strong appetite for buildings in and around the Melbourne CBD,” Mr Wizel added.
The north-western section of the city grid is currently going through a period of transformation as the Docklands waterfront and sporting precincts reach maturity and the suburb of West Melbourne continues to gentrify with several residential projects either completed or under construction.
Developer Deague Group has recently completed a major twin tower residential project immediately behind the properties – dubbed Melbourne Village, the 28 and 22 level buildings comprise 529 residences, which have all been sold.
Similarly, Trenerry Property Group (backed by Victor Smorgon Group) is embarking on a major mixed-use project on the former Australia Post exchange site in Rosslyn Street. Completion of the five-building project, which will comprise apartments, serviced hotel, retail centre and major office building, is expected in mid-2020.
The West Melbourne Structure Plan is going through its final iterations and awaiting signoff from the Minister for Planning, which is expected to include the creation of a new central high street on Spencer Street and 10,000sqm of new public open space in the area.
Under the plan, tram and priority bus services will be extended further north, with Spencer Street set to be rezoned as special use for the provision of more shops, cafes and restaurants. Private and institutional investment groups continue to actively pursue properties in the immediate area, with a smaller building at 11-17 Jeffcott Street selling for $7.6 million (2.9% yield) and American build-to-rent giant Sentinel Real Estate Corporation buying the former Don Kyatt Automobiles warehouse in Roden Street.