After ten years in the retail wilderness, St Collins finds tenants and a new name

The new raft of tenants suggest a more focused services use for the 9000 square metre building, leaving the luxury operators on the ground floor to compete with the Collins Street watch precinct.

On the first floor, Priceline Pharmacy has signed up for a 700 sq m shop and will be joined by a pathology clinic operated by ASX-listed Healius Group. German cosmetics retailer Kryolan and wellness and beauty services XtraClubs and Yuki House are also believed to be signing up for space.

Back on the ground floor, clothing retailers MJ Bale and SABA have taken 120 sq m and 150 sq m boutiques on long leases and will join existing flagship tenants TAG Heuer, Swatch and Birkenstock, who have bravely traded on through the revamp and closure.

Market sources suggest other deals in the wings include a new flagship store for adventure gear retailer Kathmandu.

Meanwhile, Waterman Workspaces has taken 2000 sq m on level two and Kingpin bowling has a ten-year lease on the basement. A-P’s Zelman Ainsworth negotiated the deals.

The new name is an improvement on the meaningless St Collins Lane moniker and the earlier Australia on Collins – the name hitched to the shopping centre built in 1992 over the 1930s-era Hotel Australia. The centre has spent ten years in a retail wilderness with a series of different owners running mis-pitched strategies.

In 2020, it sold to Credit Suisse Asset Management and Vantage Property for a bargain basement $122 million. Local investor Kaipara Property Group has since taken Vantage’s stake and UBS’ Asset Management Real Estate acquired Credit Suisse’s position after a 2023 global bailout of the troubled bank.

Up, up and away

Local investor developer Up Property has stepped out of the suburbs and scored a CBD office building for a price believed to be around $45 million.

The 16-level tower at 50 Queen Street was sold by Swiss fund manager ST Real Estate which had paid $40.7 million in 2014. The Swiss optimistically listed it for sale for $80 million in 2022 just as the office market was tanking but might consider themselves lucky to have scored any profit at all.

The deal reflects a passing yield of around 7 per cent, which is very high for CBD office buildings that were trading about 5 per cent – or lower – before and in the early days of COVID.

There were 11 bidders for the property and two unconditional offers, according to Cushman & Wakefield agent Daniel Wolman, who worked on the deal with Oliver Hay, Leon Ma and Teska Carson’s Ion Teska, Matt Feld and Adrian Boutsakis. They declined to comment on the price.

“We witnessed nine strong bids from local buyers with two offshore investors throwing some tough competition into the mix,” Wolman said. The 9156 sq m building is on a 917 sq m site on the corner of Flinders Lane. It’s about 73 per cent leased.

Up Property has a $500 million pipeline of projects in the suburbs. It recently finished Morris Moor, a redevelopment of the old Philip Morris factory in Moorabbin and last year purchased 836 Mountain Highway, Bayswater for $17.65 million.

Aspects of the unconditional deal indicate the market could be improving, not least because local investors, lured by cheap city stock, have emerged looking for bargains.

While the price was nearly half what was asked in 2022, the deal landed within this year’s $45-50 million quoted range rather than the gut-wrenching falls suffered by other office deals.

Chiu family

For an even more affordable piece of the CBD, the Chiu family is selling a three-storey building at 107 Little Bourke Street which it has owned for 55 years.

The building, leased to the Khao Soi Restaurant until 2031, was built in 1903 and designed by architect Nahum Barnett as one of a pair of shops.

Records show the Chiu family paid $27,000 for the building in 1970. It’s on a 99 sq m piece of land near the corner of Market Lane and pulls in $195,000 a year.

Lemon Baxter agents Paul O’Sullivan, Hans Fan and Tom Burley have the listing and are quoting circa $4.4 million. It goes to auction on May 9.

Sharp yield

A patient owner-occupier with long-term plans has nabbed level 11 at 100 Collins Street for $3.25 million, reflecting the sharpest strata office yield in six years, at 4.55 per cent.

The 289 sq m office is leased for another three years, making the sale process tricky for the two joint owners who had held it for 30 years.

Cushman & Wakefield agent Anthony Kirwan, who managed the sale with George Davies and Jeff Ha, said owner-occupiers are the dominant strata buyers in this market.

Interest in the property moved the agents and vendors to switch from an expressions of interest campaign to an auction. Held in front of 100 spectators it yielded just two buyers and sold after passing in at auction for its reserve price.

An owner-occupier has also bought level seven of 28 Flinders Street, a building near the corner of Flinders Lane which had been occupied by the consulate of Nepal and the Royal Gurkhas Institute of Technology.

Gross Waddell ICR agent Alex Ham and Richard Lowe did the deal. Ham declined to comment on the price but it had been quoted at around $1.4 million. A solicitor working in migration and education bought the property.

Eaton Mall

A 250-plus crowd packed Oakleigh’s Eaton Mall on sunny Thursday morning eager to watch an auction of the strip’s former bank building, now home to a Chemist Warehouse outlet.

Unsurprisingly, an associate of the retailing giant’s directors was the winning bidder out of four parties who pushed the price up to $12.1 million after 40 bids.

The final price represented a sharp yield of 2.58 per cent and a land rate of $13,956 a sq m – the hottest metrics ever recorded on the popular strip.

The huge Chemist Warehouse chain recently debuted on the Australian Stock Exchange via a backdoor listing into Sigma Healthcare.

Its founders and directors are regular buyers of the freeholds where Chemist Warehouse outlets trade and even other pharmacies that might be better located than its own shops.

Cushman & Wakefield agents Raphael Favas, George Davies, Daniel Wolman and Leon Ma handled the campaign. They declined to comment on the buyer who was nonetheless well-known to others in the crowd.

The Victorian-era bank at 30-36 Eaton Mall houses Chemist Warehouse, and three others who pay $420,000 a year in rent. The building is on 867 sq m of land.