Major players vie for East Melbourne office project
Shortlisted local and international players are sharpening their pencils to bid on a $300 million office development opportunity in East Melbourne, just outside the CBD.
Among the four or five shortlisted parties is listed fund manager GPT, which raised $800 million in June to fund its development pipeline. Local property platform Investa is also among the contenders and is understood to have teamed up with Canada’s Oxford Properties, which took over the listed Investa Office Fund last year.
Also in the mix is Singapore’s ARA Asset Management, which has become an increasingly active player in the local market, buying assets in Sydney and Melbourne while taking a stake in listed fund manager Cromwell.
At stake is the $300 million office project at 200 Victoria Parade put together by developers Golden Age, headed by Jeff Xu and smaller operator Time & Place.
The developers took over a two-building site from National Australia Bank three years ago for around $60 million. Their initial plan was to pursue a apartment project before deciding to tap into demand for office space in the fringe markets.
They won approval for an 11-storey tower on the corner of Victoria Parade and Lansdowne Street, designed by architects FJMT. With large 2,700sq m floor plates, the approved development will deliver about 26,000sq m of net lettable office space.
In June, the developers brought in JLL’s Nick Rathgeber and Leigh Melbourne to manage an investment process for the project even before anchor tenants were secured.
Office projects on the city fringe have gained traction in recent months as a scarcity of sites in the CBD squeezes opportunity. Five large-scale office projects alone in the CBD account for as many as 12 cranes on the city skyline.
The squeeze has created intense competition for the few sites which do become available, such as the Treasury Square site at the east end of the CBD, where the state government is looking for investors. Major developers, including the Investa partnership with the Canadians, are pulling together bid teams to pitch for a site which could yield $2 billion or more.
As developers jostle for tightly held city sites, investment into corporate real estate has spilled into the fringe markets around East Melbourne, Collingwood, Richmond and Cremorne, and South Melbourne.
Among the batch of fringe office towers springing up, the Liberman family-backed Impact Investment Group has control of a 13-storey office development in Collingwood.
In the neighbouring suburb, listed player Growthpoint Properties Australia is developing a two-tower project at a Richmond business park.
And nearby, private fund manager Bayley Stuart Capital has secured property portal Domain as the anchor tenant for a Cremorne development.
Charter Hall is also eyeing a plan to create a new corporate headquarters for hardware giant Bunnings on Swan Street in Richmond.
