Geelong Office Towers Sell for $40 Million

Two commercial assets have been snapped up for circa $40 million in Geelong’s burgeoning CBD.

Both office buildings were purchased on an approximate 7.8 per cent yield, with a WALE of roughly two years, by an undisclosed high net worth investor taking advantage of the two fully leased commercial assets.

The sale comes amid Geelong’s burgeoning expansion as one of the Australia’s fastest growing regional cities, attracting serious investment dollars thanks to its solid economic performance and growth fundamentals such as $3.6 billion in major investment projects.

MP Burke Commercial’s Pat Burke brokered the private sale with Dawkins Occhiuto’s Andrew Dawkins.

“The perception of Geelong as an investment proposition has changed markedly," Burke said.

"It has a strong local economy which is being fed by consistent population growth driven by affordable housing and increasing employment opportunities.”

Related: Geelong’s Tallest Tower Opens its Doors

Dawkins said interested parties were attracted to the security of fully-leased buildings as well as the development upside of 235 Ryrie Street, thanks to a planning permit allowing development of two new lightweight floors and a rooftop garden offering views across the Geelong CBD and foreshore.

The fully-leased 235 Ryrie building has five tenants: Bendigo Bank, Clinical Laboratories and Victorian Regional Channels Authority, returning $748,076 per annum.

The second building, 237 Ryrie Street, returns $2.34 million a year.

The space offers 5819sq m NLA over five levels and is leased to eight tenants including Australian Red Cross, Bendigo Bank, Department of Human Services and Morris Finance.

Related: Melbourne City Office Space a ‘Landlord's Market’

Office market strength

Closer afield to Melbourne’s CBD, the Abbotsford home of construction giant John Holland is on the market with price expectations in the mid-to-high $30 million range.

The 64-78 Trenerry Crescent property, with 80-metre frontage to the Yarra River, houses four interconnected office buildings ranging from two to three storeys, and are currently occupied by John Holland.

Due to the site’s location and current C1 zoning, Colliers International’s Peter Bremner says the property offers development potential as a high end residential apartment.

“Record low office vacancy rates in the city fringe and Melbourne’s unprecedented population growth positions this property extremely well for either investment, owner occupation or long-term redevelopment opportunities including but not limited to residential, office, health care or education uses.”

Melbourne's city fringe is an in-demand office market, Bremner says, with the current office vacancy rate of 3.29 per cent well below competing markets.

“As such, we are already fielding strong interest in this flexible and unique investment or development opportunity.”