Striking South Yarra Office Investment Sells After Competition Between Investors And Owner-Occupiers

Posted on 25th March 2024

In one of Melbourne’s first commercial property auctions of 2024, a striking South Yarra office building has sold under the hammer for $2.13 million as the suburb’s transformation continues to attract investors and owner-occupiers alike.

Fitzroys’ Lewis Waddell and David Bourke sold 59 Garden Street, South Yarra on behalf of a local family. The purchaser was a local investor.

The sale price reflected a tight 4.1% initial yield and a high land rate of $11,000 per sqm.

The property comprises a multi-level 350sqm building with immaculate light-filled office improvements, leased to highly-regarded architecture firm Telha Clarke. It is on a 195sqm sqm site with on-site parking, and offers favourable Activity Centre Zoning that allows for numerous redevelopment outcomes.

Waddell said multiple bidders competed for the asset.

“This attracted a strong mix of investors and a lot of owner-occupiers given how well the building presented,” he said.

“The purchaser acquired the property with a long-term view in mind, taking advantage of the strong tenant covenant and the opportunity to land bank an Activity Centre-zoned site close to the upcoming $1.5 billion redevelopment of the Jam Factory and other projects in the area that will really add to its vibrancy.”

Waddell said the smaller office building market is performing well for well-located assets that have character and appeal to creatives and family offices.

“A growing number of Melburnians are looking to live, work and play in highly accessible locations with great lifestyle and hospitality amenity. We’re expecting to see ongoing growth in demand for these types of spaces from both investors and owner-occupiers,” he said.

Gurner, Qualitas and Newmark Capital’s Jam Factory redevelopment will deliver new office space, 448 apartments, a five-star hotel, and an overhauled retail and cinema offering. South Yarra is also witnessing ongoing development at the neighbouring high-density Forrest Hill precinct, while other key projects on the horizon include Oreana’s $250 million redevelopment of South Yarra Square and V-Leader’s $90 million Hotel Claremont project.