Confidence in Melbourne’s Suburban Office Sector Grows with Major Sale


Chinese-backed developer Poly Holdings has settled on two mid-rise office buildings in Forest Hill, in one of Melbourne’s largest metropolitan sales for the year.

The $45.85 million deal was struck on a passing yield of about 4 per cent.

The 2.62-hectare office park, which is commercial 1- zoned, offers a net lettable area of 10,692sq m and is 70 per cent leased.

The sale was brokered by Colliers International agents Rachael Clohesy, Rob Joyes and Peter Bremner.

Poly Holdings acquired a neighbouring property from computing giant Hewlett Packard on a similarly tight yield of 3.6 per cent last year for $88 million.

Tightening vacancy rates in Melbourne’s CBD and fringe markets are driving activity around suburban office parks, with vacancy rates falling to under 9 per cent in Melbourne’s outer east.

Developer confidence in Melbourne’s suburban office sector is growing, buoyed by an $18 billion increase — 20.5 per cent — in government infrastructure investment over the last year.

Related: Dexus Seizes Collins St Precinct in $1.48bn Deal

The two buildings sold for $45.85m in one of the largest office deals of 2019.
The two buildings sold for $45.85m in one of the largest office deals of 2019.Supplied.

The suburban rail loop and the removal of level crossings, along with Vicinity’s transformation of The Glen shopping precinct are anticipated to increase suburban land values, Joyes said.

“Over the past two years, over $180 million of office investments have transacted within the Tally Ho Business Park precinct.”

Other transactions in the precinct include 8 Lakeside Drive and 12 Lakeside Drive, Burwood East, which sold for $18.08 million and $25.5 million respectively.

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