14 Ellingworth Parade, Box Hill
QS School leased the 400sqm office building, which adjoins its existing premises, for 5 years at $90,000pa.
529 Chapel Street, South Yarra
Red23 subleased the 675sqm level 1 office space from VicLand in a 3-year deal at $150,000pa gross. The building was constructed for VicLand as its headquarters, and the organisation has now moved into a new development at 11 Wilson Street, also in South Yarra.
113-115 Canterbury Road, Heathmont
Offered for the first time in 46 years, the vacant 513sqm site sold for $1.035 million. Zoned Commercial 1, it has a 12.2m frontage and has an existing 200sqm showroom with potential to divide.
220-222 Whitehorse Road, Blackburn
A national retailer bought the large-format vacant showroom in the “Mega Mile” precinct for $5.75 million, from a family that had owned the property since 1989. The 975sqm showroom is on a 1,804sqm site and has a 27m street frontage. It was previously the long-term home of Natuzzi Furniture.
317-319 Harvest Home Road, Epping
A private investor bought the 215sqm strata property for $2 million at a 5.5% yield. Located within the Aurora Village Town Centre, it is leased to grocery store Aurora Market on a 10+10-year lease returning $111,800pa plus GST. The property comprises 2 shops on 1 title and has double-frontage of 11.56m both Harvest Home Road and the shopping centre car park.
1716-1718 Sydney Road, Campbellfield
The 750sqm Vinnies op-shop building on a 2,397sqm corner site sold for $2.09 million at a 4.88% yield. Vinnies has a 5-year lease to 2024 plus options to 2039, returning $102,019pa net plus GST.
2-4 Outlook Drive, Hampton Park
The 1,546sqm corner site sold for $1.33 million at a 5.27% yield. It has 2 tenants, including a veterinarian, that return $70,200pa net combined.
30 Slater Parade, Keilor East
Swan Plumbing Supplies bought the 1,043sqm office, warehouse and showroom building for $2 million.
24/72 Logistics Street, Keilor Park
The 217sqm office and warehouse unit sold for $560,000. It is on a 229sqm site with 4 on-site parking spaces and was offered with a short-term lease available.
25-37 Huntingdale Road, Burwood
Signwave Hawthorn leased the 513sqm office and warehouse with 7 on-site car parks at $75,000pa plus outgoings and GST.
138 Hoffmans Road, Essendon
Recently listed on the ASX, HomeCo’s Daily Needs REIT purchased the Guardian Early Learning childcare centre property for $8.6 million at a 5.3% net yield. Guardian Early Learning recently renewed its lease over 804sqm facility for 10 years plus options.
64 Chapman Street, North Melbourne
A private investor bought the Vic Ortho medical centre for $5.25 million at a 5.25% yield.
The 414sqm building is on an 872smq site with 9 parking spaces. Vic Ortho uses the property for a practice, its head office, consulting rooms, radiology and admin, with the rear occupied by Orthokids. Vic Ortho’s 6+6-year lease returns $291,165pa plus outgoings and GST, with yearly rental increases of 3%.
29-33 Unitt Street, Melton
An investor bought the Mayfield Childcare centre property for $2.641 million. Zoned commercial 1, the 1,227sqm site is leased until 2025 with options to 2040, returning $155,000pa net plus GST.
294-296 Warrigal Road, Cheltenham
An overseas investor bought the St James Terrace aged care facility property for $5.8 million. The property has 45 beds and is on a 3,266sqm site zoned General Residential.
Melbourne CBD Office Vacancy Increases
Vacancies in the CBD increased to 8.2% over the past 6 months, from 5.8%, according to the Property Council of Australia.
New developments added 350,000sqm of space to the market while another 390,000sqm of supply is expected to come online over the next 3 years.
Sublease vacancies more than doubled to around 180,000sqm during the period.
Fitzroys Agency Associate, Stephen Land said there is going to be demand and supply across all parts of the office market, given movements going both ways between the CBD and the inner-suburbs.
“The movement out of the CBD and lower rents have opened the door for city fringe and inner-city tenants to look for a good deal. The CBD was perhaps a space they had not previously had in their budget and so they are now acting on the lower rent environment,” he said.
“Many businesses are looking to move to city fringe and inner suburban locations to be closer to their home, making it easier to access the workplace and collaborate with colleagues in-person during a period of more flexible working hours and arrangements. There will be some for which the CBD is the most appropriate location for this.”
He said businesses now have had a sustained period to observe the ability of staff to effectively work from home, and are now more open to flexible office arrangements.
“However, the period has also reinforced the value of the personal interaction in a professional environment, and having a devoted space away from home in which workers can share ideas and interact more personally and intuitively. These bring economic, production and social benefits.”
Land said there is also going to be movement throughout the market as tenants reassessed the use of office space.
“This could present in the form a tenant downsizing to accommodate more staff working from home, or upsizing or moving to a space that allows for more flexibility between working at desks and collaborative and meeting spaces, while giving consideration to wellbeing elements such as appropriate social distancing and natural light.”
CBD Buildings Change Hands
A number of Melbourne CBD office and retail buildings have changed hands over the summer, including the head offices of Chinese e-commerce giant Alibaba.
Peachtree Capital’s Greg Rosshandler acquired 411 Collins Street for more than $40 million. The 3,267sqm, 9-storey building was constructed in the 1930s and is also leased to 7-Eleven on the ground floor.
Residential developer Burbank divested the historic 5-level building at 100 Franklin Street, which had been its headquarters for nearly 20 years, to developer Landream for almost $30 million.
Built in the 1850s, it had been home to Victoria Ice Works – founded by James Harrison, a mechanical refrigeration pioneer and founder of the Geelong Advertiser – as well as a coach-builder, and an ironmonger.
Burbank had obtained approval for 22-storey tower with 84 dwellings and almost 4,000sqm of commercial space on the site.
Landream had just sold out of 600 Collins Street, which had been earmarked for a Zaha Hadid-designed Mandarin Oriental hotel. US group Hines bought the site for $200 million and is now planning a $1 billion-plus office tower.
In the north of the CBD, a Chinese buyer acquired the double-storey shop 469 Elizabeth Street for $5.2 million at 3% yield. It is leased to Sarawak Kitchen and sold on a 3% yield.
In the east end, a local buyer bought the 2-level building home to The Mess Hall restaurant and café for just under $5 million. The Mess Hall has a 6+6-year lease over 51 Bourke Street
Meanwhile, on the city’s fringe the Catholic Archdiocese of Melbourne acquired the double-storey, heritage-listed 384-388 Albert Street building in East Melbourne for more than $12 million from the Bionic Ear Institute.
Boutique property fund manager Banner Asset Management bought a 1930s apartment building at 458 Victoria Parade, also in East Melbourne, for $5.775 million. The block has 12 units that were undergoing renovation.
Disclosure: The weekly Fitzroys Property Wrap is for information only on transactions in the Melbourne property market. Fitzroys provides this information as a public service. We are not purporting that all sales and leases within this report were transacted by Fitzroys. Terms/Privacy © Copyright 2021 Fitzroys.