101 Collins St owner buys billionaire’s site to save Yarra River views
The $63 billion Commonwealth Superannuation Corporation has quietly snapped up a Melbourne CBD development site earmarked for a luxury apartment tower to protect the sweeping views of 101 Collins Street, the landmark office tower it owns.
CSC bought the ageing 13-storey office building at 63 Exhibition Street for about $40 million from Salta Properties, the family-owned company of billionaire property developer Sam Tarascio. Various suitors, including Lendlease, had baulked at the site’s asking price of around $80 million over the four years since it was first offered to the market.
CSC, which looks after the superannuation savings of federal public servants, acquired the site to preserve the fine views from 101 Collins Street, which stands immediately east of 63 Exhibition Street.
Regarded as one of the most prestigious addresses in the CBD’s east end, 101 Collins Street offices enjoy largely unobstructed views over the Yarra River to the Botanic Gardens, Government House and Melbourne’s southern suburbs.
CSC is expected to scrap a previously approved plan for the Exhibition Street site to be transformed into a 52-storey luxury apartment and hotel project, sources familiar with the real estate said.
Taking the long view
The owner of 101 Collins Street has a track record in fending off nearby developments that could block the views of its blue chip tenants, which include Goldman Sachs, JPMorgan, Boston Consulting Group and Allens.
In 2015, it forked out $15 million for 107-109 Flinders Lane. The superannuation fund then acquired a six-level office at 45 Exhibition Street in 2019 and a floor at 121 Flinders Lane a year later.
It has also progressively acquired suites at the nearby 55 Exhibition Street as part of that plan, some of which were owned by Salta.
Salta was also keen to control potential views over the Yarra River, with its holdings at 55 Exhibition Street and 63 Exhibition Street giving it scope to develop the Bates Smart-designed project.
But those grand views over the river proposed for the ambitious Exhibition Street development would have come at the expense of 101 Collins Street.
‘Regrettable decision’
Salta eventually scrapped its project, blaming high government taxes and a tough construction outlook. Victorian government’s property taxes – which are higher than other parts of the country – are stifling the residential construction sector, according to Tarascio.
“The divestment reflects an adjustment in appetite towards lower-risk projects until there is a stabilisation of conditions in the Victorian market, particularly in relation to state government taxes,” Tarascio said.
“In the meantime, Salta is considering placing a greater focus on geographic diversification of its portfolio in response to the uncompetitive settings in Victoria.”
Tarascio said the sale was a “regrettable decision”, but the Victorian government forced him to “take a pragmatic approach to the level of risk we are prepared to take in Victoria”.
Tarascio joins other prominent Melbourne-based developers such as Tim Gurner in criticising the Victorian government’s high taxes and debt.
“The strong consensus in other states is that Victoria is broke, it’s cold, and your property prices don’t go up,” Gurner told The Australian Financial Review late last year.
Salta will redeploy the funds from selling 63 Exhibition Street into its build-to-rent and industrial development pipelines.
Salta tapped JLL’s Josh Rutman, Jesse Radisich and MingXuan Li to sell the property, who declined to comment.
