Securing a presence in one of Australia’s most sought after business hubs, Singaporean developer Tong Eng Group has purchased a tower within the St Kilda Road office precinct for $116.3 million.
CBRE’s Michael Andrews, Luke Etherington and Kiran Pillai – in conjunction with Colliers’ Leigh Melbourne and Nick Rathgeber – managed the sale campaign for the 5 Queens Road property on behalf of Charter Hall.
Located opposite Albert Park, the 11-storey tower comprises a net lettable area of 17,500 square metres and is anchored by major tenants including Unico Computer Systems, Beca and Shape.
“This transaction reconfirm the CHOT’s focus on being an active seller in order to enhance returns for our capital partners,” CHOT Fund Manager Trent James said.
“We maintain an active, through the cycle, asset management approach across our portfolio.
"Our recent divestments, including Queens Road, provides an opportunity to divest non-core assets above book value, with capital to be redeployed into core CBD acquisitions," he said.
The property has undergone major refurbishment over the past five years, with approximately $9 million spent on upgrades since 2011. As a result of the refurbishments, the building is now positioned as St Kilda’s most sustainable building, with the only 5 Star NABERS rating in the area.
The sale result reflected an initial yield of around 5.6%.
Located on a corner site of 5,167 square metres, the property features extensive glazing and central core design that provides extensive natural light and sweeping views across the Albert Park lake precinct and Port Phillip Bay.
Mr Etherington said St Kilda’s recognition as one of the best office markets in the country attracted strong interest in the Queens Road asset.
“The St Kilda office precinct offers some of the most attractive fundamentals in the country, with an A-grade vacancy rate of 2.8% ensuring continued rental growth in this already strong market,” Mr Etherington said.
“St Kilda Road received its last new office building in 1990, and with no new supply forecast in the immediate future, the precinct is positioned to remain one of the country’s most tightly held markets.”
Built in 1989, the Queens Road tower includes recently completed end-of-trip facilities comprising 104 lockers and 56 bike racks; highly efficient floor plates of 1,680 square metres and 325 bays across two levels of basement car parking.