The Urban Developer
AdvertiseEventsWebinarsUrbanity
Industry Excellence
Urban Leader
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
UPCOMING EVENT - INDUSTRIAL AND LOGISTICS SUMMIT 16 OCTOBER, SYDNEY
INDUSTRIAL AND LOGISTICS SUMMIT - TICKETS NOW ON SALE
LEARN MOREDETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ADVERTISEMENT
SHARE
11
print
Print
OtherDinah Lewis BoucherWed 20 May 20

Signs of Life as Melbourne Office Sells for $20m

a25a84ce-2508-4dab-ac5c-28ca0412542d

Amid uncertainty in office markets due to the ongoing economic impact of Covid-19, Melbourne-based property investment group Collective Capital has snapped up a suburban Melbourne office building for around $20 million.

Located at 454-472 Nepean Highway, Frankston, the property comprises a five-level building with a net lettable area of 6254sq m and ground floor retail on a 2501sq m site, with three street frontages and parking for 142 cars.

In an off-market deal brokered by CBRE's Mark Wizel and Melbourne middle markets director Josh Rutman, the largely government tenanted building in Melbourne’s south-eastern bayside was sold 78 per cent leased with a net passing income of nearly $1.24 million. The yield was not disclosed.

The sale is a positive sign for a sector hard hit in the early stages of Covid-19 when the large-scale shift to working from home caused the suspension of some of the country’s largest office campaigns, and now, as vendors and purchasers fall out over post-pandemic prices.

Wizel said the result reflected the property’s "defensive tenancy profile"—a sought-after characteristic as challenges around the office tenant market continue to gain momentum.

"This was an astute purchase which delivered a very satisfying level of income security at a time when income security is at a premium across all types of investment classes.

"Interest in this and other defensive income properties, especially non-discretionary retail, has risen markedly in recent times and should continue to escalate while uncertainty remains," Wizel said.

The growing trend of a decentralised workforce, with office workers preference shifting to working either at or closer to home to reduce travel times without compromising productivity was also becoming a factor under consideration for investors, according to Rutman.

"Investors are seeking out opportunities where they can reposition buildings to cater for these changing worker needs in strategic locations which will be able to service a specific tenant catchment or industry.

"This building, and others like it, are well-placed to come through the current crisis in good shape."

Rutman said while there was little doubt that risk was being assessed "more prudently" at present, Melbourne’s white-collar tenancy diversity was a positive in driving medium- to longer-term confidence in the market.

Collective Capital's director Nicholas Thompson said he was confident the property would provide strong returns.

"The asset was strategically targeted due to its very strong government and government-funded tenancy profile, which, during these uncertain times, will provide our investors with a high level of income security," Thompson said.

Although lease transactions had slowed during the coronavirus pandemic, CBRE’s head of suburban office leasing, Gianni Macdonald, said the Melbourne metropolitan office market had seen a significant increase in enquiry from government tenants looking for fitted tenancies close to train stations.

"Buildings that are easily accessible by public transport and have tenancies ready to go are seen as a 'no-risk' solution for occupiers looking for new office space."

OfficeAustraliaReal EstateDeal
AUTHOR
Dinah Lewis Boucher
More articles by this author
ADVERTISEMENT
TOP STORIES
Global Shifts Redraw the Map for Australia’s Office Market
Exclusive

Office Eyes Slowdown as New Stock Supply Becomes a Trickle

Vanessa Croll
7 Min
Salta MD Sam Tarascio
Exclusive

Why Salta Won’t Break Ground on $400m Pipeline

Leon Della Bosca
7 Min
Exclusive

Precinct Proposals Bloom as Brisbane Middle-Ring Sheds its Past

Phil Bartsch
8 Min
Exclusive

Newest Land Lease Player Plots Sector Shake-Up

Taryn Paris
5 Min
Waterloo Affordable Mirvac hero
Exclusive

Affordable Housing Rules Tighten as Proposal Deluge Continues

Clare Burnett
5 Min
View All >
Gatton $150m Over-50s Solara Estate hero
Land Lease Communities

Undersupply Drives Regional Qld Over-50s Land Lease Plans

Phil Bartsch
Goldfields Elimbah Sell-Off hero
Residential

Moreton Bay Superlot Expected to Top $300m

Phil Bartsch
Parramatta Road Rezoning HERO
Policy

Parramatta Road Rezoning Opens Way for 8000 Homes

Vanessa Croll
Sydney’s "ugliest road", long dogged by failed plans, could be revived under a rezoning deal but doubts remain over deli…
LATEST
Gatton $150m Over-50s Solara Estate hero
Land Lease Communities

Undersupply Drives Regional Qld Over-50s Land Lease Plans

Phil Bartsch
4 Min
Goldfields Elimbah Sell-Off hero
Residential

Moreton Bay Superlot Expected to Top $300m

Phil Bartsch
2 Min
Parramatta Road Rezoning HERO
Policy

Parramatta Road Rezoning Opens Way for 8000 Homes

Vanessa Croll
4 Min
Development

Mirvac and DisplaySweet: Decade of Innovation in Property Sales Tech

Partner Content
3 Min
View All >
ADVERTISEMENT
Article originally posted at: https://www.theurbandeveloper.com/articles/collective-capital-20m-melbourne-office-sale