Surging demand set to push metropolitan strata office sales to new heights in 2019
Colliers International’s Ben Baines, Andrew Ryan and Raphael Favas, in conjunction with Knight Frank’s Matt Romanin and Nick Bisset, have sold transacted the entire commercial component of Chapter Group’s Ukiyo development at 101 High Street in Prahran to an owner occupier in one line for $10.5million.
Ukiyo Commercial was offered off-the-plan, as three levels of strata office, totalling 1,250sqm, with flexible floor plates of over 400sqm.
Mr Favas said the eventual purchaser was drawn to Ukiyo’s striking design and strategic positioning within walking distance to highly desirable amenity including Chapel Street, Prahran Station and a mere 500m from St Kilda Road easily connecting future occupants in and out of the CBD.
“The purchaser also valued the strength of the developer Chapter Group and their track record in delivering high quality, design led projects throughout metropolitan Melbourne and more specifically the City of Stonnington,” Mr Favas said.
“The strong sales result confirms the surging demand from owner occupiers for brand new, high quality office opportunities within the City of Stonnington in particular, and across Melbourne more widely.
“These groups have been starved of quality purchasing opportunities for a number of years which has resulted in overwhelming demand from local tenants and owner occupiers alike.”
Chapter Group Director, Dean Lefkos, said construction would commence shortly on the $40million mixed use project, with all of the commercial component pre-sold and all but three of the high end residential apartments having also sold since the launch in February, despite difficult market conditions.
“We have had an overwhelming positive response to Ukiyo from the owner occupier market who is attracted to quality, design and the unrivalled lifestyle amenity and connectivity that Prahran has to offer,” Mr Lefkos said. “We expect this trend to continue for the foreseeable future and is well suited to our business model.”
Mr Romanin said the campaign received an overwhelming amount of interest from both owner occupiers and investors with several offers being submitted for entire floors.
“Fuelled by Victoria’s strong population growth and in turn employment growth, the decline in the CBD vacancy has led to a leap in enquiry from owner occupiers/tenants seeking premium office space in fringe areas such as Prahran,” he said.
Colliers International was currently working with more than 30,000sqm of active demand for similar office opportunities.
“This unprecedented demand will continue to support future commercial development throughout metropolitan Melbourne and more specifically in the city-fringe,” Mr Baines said.
“This strong demand for strata office assets has resulted in a significant 14% increase in capital rates for strata office in the city-fringe in 2019.
“The transformation of the development climate from a heavily weighted toward residential has shifted with a number of developers altering their permits to either mixed use with a large component of office or full commercial developments.”
Including the transaction of 101 High Street, Prahran, Colliers International estimates around $46.28million of strata office stock has been sold in the city fringe market to date this year.
“This means we are on track to eclipse the $50.16million of strata office transacted last year,” Mr Favas said.