Melbourne Build-to-Rent Project Goes to Market

A build-to-rent development in Melbourne’s inner south-western has been put up for sale.

Union Quarter, at 31-69 McLister Street in Spotswood, is believed to be the first large-scale completed build-to-rent asset to be offered to the market in Australia.

It is being sold via an international expressions of interest campaign run by Knight Frank agents Langton McHarg, Stephen Kelly and Tim Holtsbaum in conjunction with Conal Newland and Paul Savitz of Savills.

Union Quarter is a mixed-use build-to-rent development comprising 332 apartments with retail that includes a full-line Woolworths, Dan Murphy’s, a medical centre and chemist, plus specialty shops that include food offerings, a restaurant, and extensive basement parking.

The apartments, a mix of one, two and three-bedrooms, are housed in two towers—106 apartments in a seven-storey building known as The McLister apartments and 226 apartments in an eight-storey building known as The Hobson Apartments.

The development, which will be home to more than 500 people, is expected to become a thriving neighbourhood activity centre with retail and residential accommodation, designed by award-winning Baldasso Cortese, and delivered by Hickory Builders.

The developers said the residential apartments are expected to set a new standard in Melbourne’s west, with amenity including a co-working business lounge, social dining room, function spaces and communal terraces boasting panoramic views of the Melbourne skyline.

Union Quarter is less than 7km from the Melbourne CBD and near Williamstown Beach.

Development director Zoran Pavlovic said there had been significant buyer interest in Union Quarter for some time, hence why the development was being taken to the market via a formal campaign.

“With a chronic undersupply of rental accommodation in Australia, more build-to-rent projects are needed in Australia, and investor appetite for these assets is strong, both domestically and from overseas capital,” he said.

“Union Quarter is nearing completion, eliminating any development risk for an incoming purchaser in a market where construction costs are escalating, feasibility metrics are tightening for many build-to-rent projects.

▲ The mixed-use build-to-rent development at Spotswood is due for completion soon.

“This defensive asset enables investors to enter the tightl -held rental market to take immediate advantage of both income growth and future capital growth and secure an asset below replacement cost.”

Spotswood has a highly competitive and tight rental market, with vacancy at a record low of 1.1 per cent according to SQM Research, and forecast low levels of residential supply will help sustain occupancy and future rental growth.

Recently released research from Knight Frank found after a long gestation period, the build-to-rent sector in Australia had sprung to life, with the quantum of committed and planned development increasing fast.

The report found a wave of construction activity was under way, with Melbourne leading the way for build-to-rent developments, making up 45 per cent of the build-to-rent pipeline nationally, with 4920 apartments under construction and a further 8250 approved. 

Brisbane was next with 27 per cent of the pipeline, with 1743 under construction and 2567 approved.

According to the report, across all regions globally investors are seeking greater exposure to alternative sectors and the residential ‘living’ sectors are at the front of the queue, led by build-to-rent.

The research found that for the first time, residential is the most sought-after sector for global investors targeting the Asia-Pacific region, and Melbourne and Sydney are the preferred locations.

The expressions of interest campaign for Union Quarter is due to close at 3pm on October 5.