Colliers International and Bayley Stuart have been appointed to sell the most significant metropolitan office listing to hit the market to date in 2015, Bayside Junction.
Colliers International’s Peter Bremner and Jeremy Gruzewski, in conjunction with Bayley Stuart’s Andrew MacGillivray and Alasdair MacGillivray, are selling Bayside Junction at 973 Nepean Highway, Bentleigh.
“Bayside Junction has asserted itself as the premier office asset in Melbourne’s South East market and represents an enticing investment proposition,” Mr Bremner said.
“It has recently undergone a stunning lobby refurbishment and welcomes brand new high calibre tenants Alfred Health as an agency for Headspace and Royal District Nursing Services in addition to the Commonwealth Government confirming their commitment to anchor around 50% of the building for another five years."
Mr MacGillivray said: “The entire 11,956sqm building has been leased or renewed within the past 12 months during what has been a subdued leasing market. This illustrates the demand of new entrants wanting to secure tenancies within Bayside Junction and also the commitment of existing tenants to remain for further terms."
With a replacement cost for this asset estimated to be in excess of $60 million, Mr MacGillivray said new entrants were unlikely to enter the market with comparatively priced future competition.
“This underpins the market dominating position that the property holds,” he said. “Located in a prime South Eastern location, Bayside Junction offers a rare opportunity to make an investment in a recently refurbished and landmark office building in the bayside suburb of Bentleigh."
The property occupies a landmark position within Bentleigh, close to a multitude of business services, public transport, major road networks, cafes and retail and surrounded by some of Melbourne’s most desirable suburbs including Brighton, Sandringham and Hampton.
It offered a net lettable area of 11,956sqm, 340 on site car parks, a net passing income of approximately $3.6 million per annum and a WALE by income of 4.25 years.
“The amenity that surrounds Bayside Junction cannot be underestimated for its ability to attract quality tenants who recognise the benefits of being surrounded by all of the high quality local area amenities and services that you would expect to find within an established Melbourne suburb,” Mr Gruzewski said.
“Centre Road is one of the main shopping strips with over 250 retail businesses, with a focus on fresh food and produce and cafes. Along the highway itself are major big box superstore retailers, leading car dealerships and other commercial and retail enterprises.
“Westfield Southland Shopping Centre, with over 400 specialty stores, is located only 3.6km away.
Cross Nepean Highway and you’ll soon be at Brighton Beach, which is renowned for some of Melbourne’s most stately homes and a beautiful foreshore that features historic and brightly coloured bathing boxes."
Mr Bremner said in excess of 74% of Bayside Junction’s income was derived from Government, Government subsidised or listed tenants which ensured ultimate security of cashflow.
“The strong, long term returns Bayside Junction will provide are attractive and transparent yet it still goes a step further as an investment proposition as it adds potentially even more lucrative long term outcomes by utilising the massive 6,466sqm landholding for an even greater Melbourne landmark, as a residential or hotel conversion or through the addition of new floor levels,” he said.
Bayside Junction incorporates a high quality café and gym on site, a new lobby and outstanding views across Port Phillip Bay, the Melbourne CBD and Dandenong Ranges. It offers exposure to 60,000 passing vehicles per day and sizeable floorplates of more than 2,000sqm.
Mr MacGillivray said the South East office market was one ofthe most tightly held in Melbourne. The current vacancy rate was 2.9%, compared t o 6% for the total Melbourne metropolitan market and 9.1% for the Melbourne CBD market..
“The vacancy rate fell from a previous record low of 3.43% in September 2014,” he said. “The fall in vacancy has been driven by developer demand for prime residential development sites. This is creating a scarcity of available prime office sites in the South East."
Agents expect Bayside Junction to sell for in excess of $42 million, which would equate to a yield of around 8.5% and a favourably low capital value rate of around $3,600/sqm. This would be well below the traditional capital value rates of Melbourne’s inner suburbs, which sell for some $2,000/sqm more at circa $5,500/sqm.
The property is for sale by expressions of interest closing Thursday August 6 at 4pm.