Canadian funds giant shifts Queen Victoria Market focus to student housing

Two years ago, vendor Landream entered into a joint venture with Alt Living to build a 267-apartment 40-storey tower and a basketball court on the site.

This week, a request was lodged to amend the permit to a 1013-room, 39-level tower – with no basketball court.

The site is just down the road from Lendlease’s $1.7 billion redevelopment of the market car park, which will involve 1700 apartments, including 560 build-to-rent units and an office tower.

Student housing operator Scape also plans a $350 million-$400 million 1100-bed student development on a site further up Franklin Street, opposite the Flagstaff Gardens.

Landream had spent a small fortune on the site, paying $28 million for Burbank House at 100 Franklin Street in December 2020 and a further $21.5 million a few weeks later for its neighbour at No.104.

The original planning permit allowed for the partial demolition of Burbank House and the razing of No.104, a three-storey warehouse built in 1926.

The Department of Transport and Planning is assessing the proposed changes.

Brookfield declined to comment on how much it paid for the site. It has a $US6 billion ($9 billion) global student accommodation portfolio and entered the Australian market in 2022.

“We see ongoing tailwinds for the sector,” Brookfield’s Australian head, Ruban Kaneshamoorthy, said. “The thematics driving student housing in Australia are strong.

“There has been significant growth in international student enrolments during the past 10 years, driven by a burgeoning Asian middle class who view Australia as an attractive studying location.”

Kaneshamoorthy said there was limited high-quality student housing in Australia compared with other cities.

Hardware Lane

Not far away, at 385 Little Lonsdale Street, members of the Giannarelli family are offloading a five-level office.

The Colonnade Building, part of the Hardware Court project that was developed in the 1980s, is expected to sell for more than $11 million.

It sits at the western end of the Hardware Lane precinct and last changed hands in 2014 for $7.65 million.

The 1159 sq m building is on a 351 sq m site and includes a basement car park. Just two of the floors are leased.

Cushman & Wakefield agents Anthony Kirwin, Daniel Wolman, Leon Ma and Oliver Hay are handling the expressions of interest campaign.

Union penthouse

Still in the CBD’s west end, the penthouse floor of an 11-storey union-owned building at 365 Queen Street is up for grabs.

The building’s nine floors of office space are owned by the Australian Council of Trade Unions and a clutch of other unions, including the Australian Nursing Federation and your correspondent’s union, the Media, Entertainment and Arts Union.

Records show the Communications, Electrical and Plumbing Union (CEPU) paid $2 million for the large 579 sq m top-storey space in 2012.

Unions quietly bought up all floors of the building in 2006 after the ACTU sold its Swanston Street digs to the low-profile billionaire Gunn family for $9.65 million.

The strata-titled offices reaped a total $12.68 million for developer Central Equity. The CEPU, which is headquartered in Sydney, bought its office from ACTU Property.

The Gunns sold ACTU House, opposite RMIT University, to student accommodation developers Scape for $30 million in 2014.

JLL agents Tim Carr and Nick Peden expect about $6000 a sq m for the space, which would equate to about $3.47 million. It’s near the market on the corner of A’Beckett Street.

Fresh fringe

Two newly built offices in the burgeoning fringe markets around the CBD have hit the market and will likely set new investment benchmarks for the next development and investment cycle.

First cab off the rank is 1 Sackville Street in Collingwood, which developer Ricdanic completed in 2022.

The 5341 sq m eight-level office is fully leased to a slew of technology companies, including Linktree and Epic Systems, and is expected to fetch about $50 million.

It’s on the corner of Smith Street, north of Johnston Street, so not quite in the commercial heartland around Wellington Street in Collingwood’s south side.

The 933 sq m site changed hands for $8.52 million in 2019, just as the Collingwood office market was gathering steam.

Cushman & Wakefield’s Wolman and Hay are handling the sale.

In Cremorne, the city’s even hotter tech market, a new, seven-storey office at 19 Cubitt Street is for sale in the sub-$20 million market.

The 1342 sq m building, completed recently by boutique office developer Curtis Yorke, is leased to five businesses, including R/GA Media Group, with net rentals averaging $718 a sq m.

Records show the site, near Richmond railway station and a precinct packed with big tech companies, was purchased for $3.35 million in 2019.

JLL’s Tim Carr, Josh Rutman, Nick Peden and MingXuan Li are managing the campaign.

Enthusiasm for fringe office space is bullish. Projects by Crema – the development arm of Crema, the builder – has sold seven of its eight half-floor strata offices, reaping more than $30 million.

Buyers at the building that is going up at 8 Palmerston Crescent in South Melbourne include three family offices, a charity and three professional services.

Lacklustre auctions

Investors are proving cautious, with two benchmark auctions on Thursday providing lacklustre theatre.

Two bidders placed just three bids for the Shawcross Building on Brunswick Street, which passed in on a vendor bid of $5 million. An opening bid of $4.5 million was followed by two further $100,000 offers and a $4.8 million vendor bid.

The three-storey American Romanesque building at 320 Brunswick Street is fully leased and returns $227,668 a year in rent.

The vendors bought the property in 1981 and have ridden Fitzroy’s lucrative wave of gentrification.

Fitzroy’s David Bourke conducted the auction with Chris Kombi, Ervin Niyaz and Ben Liu wrangling the bidders.

At an earlier auction, Fitzroys’ Mark Talbot and Shane Mills sold the newsagent’s building at 325 Lygon Street, Carlton for $1.78 million after it passed in on a vendor’s bid.