BPM and the Uniting Church has sold an eight-storey office building in central Melbourne with approval for a hotel development.
The tower at 130 Little Collins Street, the Uniting Church Centre, sold to Jeff Xu's Golden Age Group along with a permit for a 27-storey Elenberg Fraser-designed hotel.
The 184-room hotel was originally knocked back by Melbourne Council, but was approved late last year after the church took the case to the Victorian Civil and Administrative Tribunal.
Owned by the church’s property trust, the existing building comprises a net lettable area of 3,797 square metres, comprising eight levels of office, ground floor retail, a chapel, and 15 car spaces.
The Uniting Church moved to offload the building ahead of its move into Charter Hall’s redeveloped Wesley Place tower at 130 Lonsdale Street, due for completion in 2020. The Little Collins Street property was sold with a leaseback to the Uniting Church.
The church appointed CBRE's Mark Wizel, Julian White and Nathan Mufale in conjunction with Colliers International’s Daniel Wolman, Guy Wells and Oliver Hay to broker the property.
Colliers' Daniel Wolman said the property had the benefit of a high-quality permit for a hotel development, the substantial existing improvements were the major market attraction.
“The result reflected the very strong demand for office investments in the nation’s tightest CBD office market.”
Whether or not the new owner decides to pursue the planned hotel development, the transaction has come at an “opportunistic” time as Melbourne's office market tightens.
The city currently has in excess of 455,000 square metres of new office stock forecast to enter the market from now through to 2021, 80 per cent of which is already committed.
Melbourne is now the tightest CBD office market in Australia with an office vacancy rate of 3.2 per cent with net face rents forecast to go up by a further 9 per cent by the conclusion of 2019.
Approximately 128,620sq m of new office space expected to be delivered over the remainder of the year.
The exit from the prospective hotel venture on the Little Collins Street site is in keeping with Hallinan's recent strategy, moving away from the high-rise apartment market early last year to focus on developing hotels.
The Little Collins Street site is the third planned hotel development involving Hallinan’s BPM that has been either sold or scrapped.
Last year, BPM sold the 241-room Quincy Melbourne hotel on the corner of King Street and Flinders Lane off the plan to Indian billionaires Kapil and Rahul Bhatia for $91.3 million.
Another 130-room four-star hotel on Exploration Lane, a block from Victoria's State Library on a small 168sq m site, has also been placed on the market by Hallinan and John Knowles.