Fortis buys two Melbourne sites for $108 million commercial projects
Developer Fortis has snapped up two new sites on Melbourne’s city fringe for $26 million, to develop into premium office and retail assets with an end value of $108 million.
Fortis plans to build and hold the projects, located in Richmond and South Melbourne, as long-term income producing assets as it bulks up its commercial portfolio.
The developer acquired the first site at 1 Little Lesney Street in Richmond for $16 million from Little Projects, a Melbourne-based builder and developer.
The 907 sq m property is located next to 8 Brighton Street, where Fortis is currently developing a mixed used project valued at $115 million.
The new site will be developed into a 12-storey office building with retail space offering as well. It is expected to yield more than 5500 sq m of net lettable area. Fortis plans to submit a planning application in February and expects to complete the project by the middle of 2024.
The transaction was facilitated by Colliers’ Ben Baines, Ted Dwyer and Daniel Wolman.
“The immediate precinct is continuing to gather momentum, with Colliers alone having sold four other sites within a few hundred-metre radius in the last 18 months, including the site at 8 Brighton Street to Fortis,” said Mr Dwyer.
The second acquisition at 122-132 Moray Street in South Melbourne was purchased for around $10 million from a private vendor in an off-market transaction. This is the fifth commercial project by Fortis in the suburb.
The 697 sq m site is located near the upcoming ANZAC metro station, Coventry Street and Clarendon Street retail districts, and South Melbourne Market.
Fortis also plans to develop the site into a boutique office space across a seven-storey building with a retail offering on the ground floor. A planning application is expected to be lodged in the next three months and the development is set to be completed by late-2024.
Both sites were acquired towards the end of last year.
“Both acquisitions play an important role in adding quality assets to our growing portfolio,” said Charles Mellick, director of Fortis.
“We have such a strong pipeline of sites already in South Melbourne, and 122-132 Moray Street plays an important part in ensuring that we continue to meet market demand, responding to the shortage of premium boutique office space in the area.”
Mr Mellick said demand for quality commercial space in the city fringe had been rising even before the pandemic.
“Over the last few years, we have witnessed the increased demand for premium city fringe commercial offices in Melbourne from companies that want to work closer to home, and the pandemic has only strengthened that,” he said.
“We see continual demand for these assets which are predominantly mid-rise buildings, with a heavy focus on amenity and external breakout areas for our tenants.”
Non-bank lender Pallas Capital (the parent company of Fortis) is funding the acquisition and development of these projects.
