Tightening yields and growing interest in a shifting commercial landscape has prompted expectations of $60 million for a 12-storey office building up for sale in the western pocket of Melbourne’s CBD.
The building, located at 601 Bourke Street, is being offered with a 5.6-year WALE and features flexible floor plates that benefit from natural light from three sides.
Its location within the West End of the Melbourne CBD has undergone a transformation over the past decade, with some of the city’s largest corporates relocating to the precinct.
A number of landlords have also upgraded their assets to provide more office accommodation and significant retail activation.
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The property is home to several big-name tenants including Toshiba, Study Group and Pragmatic Training.
CBRE’s Kiran Pillai, who is marketing the building, said significant investor interest was to be expected, given the current appetite for Melbourne office assets and the building’s prime corner position.
“Very few CBD office transactions have occurred within this price bracket in the Western Core, and there is a clear appetite from investors who are looking to take full advantage of the strong office market fundamentals that Melbourne is showing,” he said.
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601 Bourke Street last changed hands in 2012 for 29.1 million on an initial yield of 9.91 per cent. The building is expected to fetch as much as $60 million.
“Over $3 billion in office, retail and residential development is either planned or underway in Melbourne’s mid-town. It’s a rapidly changing landscape and investors are looking to get a piece of the action before this market fully matures,” Pillai said.
