St Kilda Rd office market springs back to life
Two substantial office buildings on Melbourne’s St Kilda Road have hit the market, the first such opportunities to be offered in more than a year along the leafy city-fringe boulevard.
At 570 St Kilda Road, investment manager Terraplex is putting a 7647 sq m building to market, which it acquired almost a decade ago. It could fetch $65 million or more.
A block further down and on the opposite side of the popular precinct that leads into the CBD is 607 St Kilda Road a 7207 sq m office block, held privately, which is on the market with hopes in the high $60 million range.
Significantly, both opportunities come as Melbourne prepares for its much-anticipated release from its long sixth lockdown.
Both assets are the first $50 million offerings in the precinct in more than a year. By contrast, although the pandemic has disrupted the usual trade in CBD towers, there has been a steady trickle of commercial properties changing hands over the past 18 months.
The major tenants at 570 St Kilda Road include Simonds Homes, Accolade Wines and ALM Williams Partners after its owner invested in a revamp.
“We are incredibly proud of the building’s performance over the past nine years, however the closed-end fund in which 570 St Kilda Road sits has reached its natural conclusion,” said Terraplex directors Anthony Wilson and Charles Raymond.
CBRE’s Kiran Pillai, Scott McGlone and Hugh Thomson, along with Cushman & Wakefield’s Leigh Melbourne, Nick Rathgeber, Mark Hansen and Josh Cullen, have been appointed to broker that property.
“All major tenants have re-committed to the building recently, which will drive confidence from a market that is very focused on income rigidity,” Mr Pillai said.
On the other side of the boulevard, 607 St Kilda Road generates a large proportion of its income from hospital operator Alfred Health, making it a potential target for healthcare-focused property investors.
“The office investment market in Melbourne has been starved of opportunities in 2021, with only one commercial asset above $50 million changing hands in St Kilda Road in the last 24 months,” said JLL’s Josh Rutman, who is handling the property with Cushman & Wakefield’s Leigh Melbourne.
“It’s no surprise that buyers are actively hunting for properties in the precinct. St Kilda Road’s currency has evolved as tenants look to base themselves close to the CBD and within walking distance of green open spaces and the future Anzac train station.”
In June, Alfred Health acquired a prime site for $31 million, a deal made possible after the 25 separate owners of apartments and offices in the 1930s building at 545 St Kilda Road pooled their interests to sell in one line.
The last major office transaction in the precinct was the sale of Flight Centre’s building at 436 St Kilda Road for $62.15 million to Shakespeare Property Group in May last year in a sale-and-leaseback style deal.
