No bull, this developer just got a 33pc discount on an office tower
Developer John Marro has shrugged off gloom about Melbourne’s weak office market, commissioning a New York-style charging bull statue for the 15-level city fringe building he bought for $28 million and will spend a further $5 million to upgrade and refit.
Marwood Property Group director Mr Marro, who last month snapped up 432 St Kilda Road for two-thirds of the $41.6 million records show vendor UK fund manager abrdn paid for it a decade ago, said he was optimistic about the office market in the country’s second-largest city.
“I see we’re at the bottom of the office cycle,” he told The Australian Financial Review on Monday. “I think it’s a bull market.”
A sign of that optimism was the statue – inspired by a recent visit to New York, where the bronze original sits on Broadway – Mr Marro will put at the entrance to the building 500 metres from the Anzac Metro Station that is due to open this year.
It’s an optimistic sign by the privately owned developer of industrial property. While a recovery in values is expected to drive deals in institution-grade office deals in Sydney this year, the market in Melbourne is lagging and likely to stay in the doldrums for another year.
But private investors with cash are showing interest in smaller, sub-$100 million sites.
Marwood acquired the site after an expression of interest campaign that drew five other offers from local buyers, just one of which was an institution-backed developer, said JLL’s Victoria head of capital markets Josh Rutman, who brokered the deal with colleagues Tim Carr and Piper Dedrick.
The developer funded the deal with its own cash and some financing from Bendigo Bank, Mr Marro said.
“Everyone was local, which is a changing trend,” Mr Rutman said. “When St Kilda Road sites have been trading in the last decade, a lot of Singaporean and Chinese money has come in for developments and office. Those owners are still around but they’re not as active in acquisitions.”
Marwood has already received approval to refurbish the near-vacant building, which it will rebrand as Exchange 432 and lift the current 1-star NABERS energy rating to the 4.5-5-star level needed to attract tenants wanting a whole 750-square-metre floor plate or less, Mr Marro said.
An accounting firm and a medical company had already signed heads of agreements to take up a full floor and a half floor in the building that was due to complete its refurbishment later this year, he said.
One of the main drawcards for potential tenants was the expected completion this year of Melbourne’s five-station $15.5 billion Metro Rail, Mr Marro said.
“I can’t wait for that to occur,” he said. “It’ll have a hugely positive influence for commuters’ ease of access. There’ll be less pressure on the roads.”
