A Melbourne property hat was once home to the iconic Hoyts Cinema has more than doubled in value within a year, after being sold within a week of hitting the market.
Colliers International’s Daniel Wolman and Oliver Hay have sold Level 1, 140 Bourke Street for $2.21 million on behalf of a private investor, in a landmark deal for strata office space in the Melbourne CBD.
The property doubled in value on a per square metre rate on the net lettable area.
The prime strata office building at the east end of the Melbourne CBD comprises a Virgin Active gym on the ground floor and a full 300sqm, refurbished floor of strata office on Level 1 with full amenities, including a 300sqm terrace and four car spaces.
Mr Wolman said the well-known Melbourne building attracted overwhelming interest from owner-occupiers within the first 24 hours of being on the market.
The property was purchased by Drapac in 2004. It was refurbished and converted into strata offices, with each suite sold separately.
[urbanRelatedPost][/urbanRelatedPost]Mr Wolman and Mr Hay sold Level 1, one of the last remaining floors, on behalf of Drapac in March 2014 for $1.3 million, reflecting a rate of $4333/sqm for the 300 sqm floorplate.
“The private investor who purchased Level 1 last year was looking to owner-occupy the space for his law firm, however due to a fast-growing market and the need for further firm expansion, he moved to on-sell the property in April this year,” Mr Wolman said.
“After completing some minor works to the floor, including dividing it into two smaller suites of around 254sqm, plus the 300sqm balcony, we sold the floor within a week of it being taken to market for $8,700/sqm.
“Within 24 hours of the property being released to the market, Colliers International received two offers on the property. In total, four offers we received within the first five days, each well above reserve, which paved the way for an incredibly quick sale.
“We don’t normally see jumps in values like this – just over double in a year on NLA – for strata property in the CBD, let alone strata office. These spikes are something we are more used to seeing with freestanding buildings, where there is flexibility of future use and development potential.
“This outstanding sales result demonstrates the strength in the market across all sectors of property. In particular, it highlights the increasing desire we are witnessing from businesses who want to purchase and own their premises rather than lease, encouraged by ever-low interest rates.
“Office owners are finding it easier to pay off their mortgages quickly and can see the added value in capital appreciation of CBD strata offices. Commercial CBD real estate values have never increased more quickly, which is giving confidence to investors to change their business model and purchase rather than lease.
“While this sale at 140 Bourke Street reflects a high price for a refurbished strata floor, what is most promising for the domestic market is that all four offers came from local parties. Interest came from well-established professionals including lawyers, doctors, accountants, real estate agents and property syndication firms.”
The buyer of the floor is EMKC, who Mr Hay says are an active private development and investment group.
EMKC’s Director Karen Choi said: “The strong locational attributes and amenity of the expansive terrace made the acquisition a logical choice.”
EMKC will occupy one of the tenancies for use as its head office and intends to lease out the balance of the floor. EMKC successfully completed the repositioning of Level 4, 50 Market Street in 2014 and are actively seeking further acquisition opportunities.
Mr Hay said the four secure car spaces at 140 Bourke Street were a significant addition to the asset.
“With the ongoing construction of apartments in the CBD, public car parking will become harder to secure,” he said. “Private car spaces are rapidly increasing in value, with many spaces now selling for well over $120,000 per bay. Having four car spaces included in the offering added a large monetary value to the investment."Mr Wolman and Mr Hay are also selling one further suite within the building and are already fielding strong interest.