A major office and retail investment opportunity within one of the Melbourne CBD’s most dynamic and rapidly developing precincts has sold to a private Chinese investor.
Colliers International’s Daniel Wolman, Matt Stagg, John Marasco and Oliver Hay, in conjunction with managing agent, Teska Carson’s Michael Ludski, negotiated the transaction of 438 Elizabeth Street, Melbourne, for an undisclosed price on behalf of a private vendor.
Mr Wolman said the property has attracted steady interest from a range of buyers, including private individuals and corporate funds, both local and offshore.
The 10-level office building, with retail frontage of more than 51m and a net lettable area of about 13,812sqm, includes four prime retail tenancies and 107 secure undercover car parks on a huge site area of 2,044sqm.
The property is almost fully leased to a strong group of tenants anchored by RMIT University. It returns an income of about $4.5million per annum and is well positioned for rental growth given Melbourne’s buoyant office-leasing market.
“The buyer seized the opportunity to secure a commanding office and retail investment situated within one of the Melbourne CBD’s most dynamic and evolving precincts, the civic core,” Mr Wolman said.
“It is surrounded by a variety of major commercial, education and retail destinations, including the Melbourne Central office and retail complex, QV, Queen Victoria Market and Swanston Street."
Mr Hay said that the Chinese investor planned to hold the asset as one of Melbourne’s largest pieces of land available to purchase on Elizabeth Street. This area is expected to increase in value with the changes to Swanston Street from the Metro roadworks, hence shifting more traffic to Elizabeth Street.
The shortage of quality office buildings within the precinct drove competition for 438 Elizabeth Street.
“The low office vacancy rate in the precinct demonstrates the shortage of quality office buildings and the competition for scarce sites from other sectors, including education, student accommodation, retail and residential,” Mr Wolman said. “438 Elizabeth Street is strategically located to capitalise on the shortage of office accommodation within the area."
Mr Stagg said the concentration of universities and growing student population in the precinct had sparked a residential apartment construction boom that was showing no signs of slowing down.
“The university education sector is the City of Melbourne’s largest industry and occupier of real estate,” he said. “There is a concentration of universities along the northern boundary of the Melbourne CBD, including RMIT University, University of Melbourne and Melbourne Institute of Technology, as well as the Medical Research Precinct.
“These major institutions are internationally respected and attract students from around Australia and overseas. In order to remain competitive in the global education market, these universities have invested hundreds of millions of dollars in new state-of-the-art campuses throughout the precinct."
The proximity to public transport, including Melbourne Central station and the Queen Victoria Market tram interchange, was also a key factor in the sale.