From $40m to $80m, and back to $45m: A Queen Street office’s discount journey
Capital Gain
Swiss fund manager ST Real Estate is having another crack at selling its B-grade office building on Queen Street, savagely cutting the price to meet the market.
The 16-storey tower at 50 Queen Street is the first CBD office building to hit the market in 2025 after the few deals achieved in 2024 suffered heavy write-downs.
ST Real Estate paid $40.7 million for the office in 2014 and optimistically listed it for sale around $80 million in 2022, just as the office market began its decline.
Values plummeted at a rate not seen since the 2008 global financial crisis and this time around, the building is quoted around $45-50 million.
The 9156 square-metre tower is on a 917 sq m island site between Collins Street and Flinders Lane. Parts of it got a swanky make-over in 2023, and it’s currently 73 per cent leased. If fully let, it could return more than $4.6 million in rent.
Cushman & Wakefield agents Daniel Wolman, Oliver Hay and Leon Ma, with Teska Carson’s Ion Teska, Adrian Boutsakis and Matthew Feld, are handling the campaign.
“There’s momentum already this early in 2025. People are getting bullish about the expected rate cuts and we think there will be a lot of interest from local, interstate and international buyers,” Wolman said.
Tally Ho
Chinese-backed investment and development company APH Holding collapsed just before Christmas, but another of its subsidiaries is being wound up with its only asset, an office in the Tally Ho business park, up for sale.
The 2314 sq m East Burwood office is owned by one of APH’s associated companies BFX 16 Lakeside Drive.
Pitcher Partners, acting as receiver and manager, is putting the building up for sale. Deloitte has been appointed liquidator by the Federal Court.
The part-vacant building was bought in March 2022 for $13 million but it’s unlikely to see that price this year. Its neighbour at 12 Lakeside Drive sold last year for $17.4 million or a building rate of $3865 a sq m.
Those metrics would give No.16 a value of around $9 million. But creditors’ reports indicate parties are claiming at least $17 million. La Trobe Financial Services is owed $8.32 million, Marshall Investments, a further $3.1 million while entities associated with APH are claiming $5.69 million.
Stonebridge Property Group agents Julian White, Max Warren and Chao Zhang have the listing.
Funder MaxCap pulled the plug on APH Holding last year with up to $200 million in outstanding loans.
APH, owned by James Zhang, sought to re-brand itself as an investment company in August after its development arm ran out of money amid rising construction costs.
Multiple sites, mostly in Box Hill’s CBD, went on the market as well as APH’s prize assets, the former Hewlett Packard campus, in Forest Hill, which is in due diligence. A Malaysian-government owned company MRCB Australia lobbed a $68 million bid for the 5.8 hectare property at 353-383 Burwood Road – a long way short of the $90 million asking price.
Retail core
Back in the CBD, a three-storey bluestone building in the retail core, opposite the GPO and the Bourke Street Mall, is for sale.
Records show racing enthusiasts Ken and Catherine Biddick bought 203-207 Elizabeth Street in March 1993, paying $2.15 million. That dates back to when Australia Post owned and traded out of the Italianate landmark across the street and Bernard’s Magic Shop was still selling whoopee cushions next door.
A trawl through Trove, the National Library of Australia’s newspaper database, shows the building was once occupied by furniture manufacturer McKell, Speedie and Co but became a pop-up shop in 1924, selling excess military gear, including trench coats and riding breeches.
The building includes three ground floor shops and six apartments on the upper levels. While one of the shops is empty, the other two are let to Bloomy Hair Salon and clothing store Set Studio.
The Cushman & Wakefield agents running the campaign, Anthony Kirwan, Hay, Wolman and Ma, declined to comment on their vendor. The building is expected to sell for between $9 million and $10 million.
Child care
The Neston childcare development group has sold a centre in Preston to an Asia-based investor for around $9 million.
Leased to the Guardian Childcare group, the 141-place centre is at 391 Murray Road, a few minutes from Preston West Primary School.
CBRE agents Sandro Peluso, Marcello Caspani-Muti and Jimmy Tat negotiated the deal, which is the second for the year.
The team recently sold a centre in Melton for $5.35 million, reflecting a soft yield of 6.8 per cent. By comparison, the yield on the Preston deal hit the 5.5 per cent mark.
“This marks our team’s third Guardian-leased childcare centre sale in the past six months and fourth childcare sale in the past 30 days to Asian-based investors. All of these sales had an above average transaction cap rate of circa 5.25 to 5.75 per cent,” Peluso said.
Guardian has a 15-year initial lease with multiple options.
Deals and listings
There were plenty of deals done during the Capital Gain hiatus, including the sale of the Lululemon outlet at 131 Smith Street, Fitzroy.
The 501 sq m shop on the ground floor of Outline’s new apartment project has a new seven-year lease to the NASDAQ-listed yoga gear retailer.
It’s understood to have sold for $6.35 million reflecting a yield of 6.3 per cent.
JLL agents Jesse Radisich, Tim Carr, Jarrod Herscu and MingXuan Li did the deal.
There are more Smith Street properties coming up for sale. Stonebridge agents Nic Hage, Rorey James, Ian Lam and Chao Zhang have the listing for 209-211 Smith Street, the former Commonwealth Bank branch on Smith Street which is leased to local furniture manufacturer Tait.
The 1000 sq m building is on an 820 sq m corner site and last changed hands in 2015 for $7.1 million.
They are also auctioning 272 Smith Street, a medical centre and pharmacy held by the same partners for nearly 40 years.
That 550 sq m building is on a 289 sq m piece of land near the Woolworths which is about to be turned into an apartment building by the Grollo-owned Casa group. It changed hands last year for $46 million.
Meanwhile, a medical group has snapped up 1357-1361 High Street, Malvern, for $4.5 million in an offmarket deal. Cushman & Wakefield agents Raphael Favas and George Davies handled the transaction.
And in Hawthorn, an Australian Red Cross op-shop sold to an offshore investor before auction for $3.2 million.
Fitzroys agent Mark Talbot said the knockout offer for 222 Glenferrie Road set a land record for the strip of $16,667 a sq m.
“We’re seeing more investors turn to quality Melbourne shopping strip assets for security at a time of share market and residential market volatility,” Talbot said.
