Colliers International, Teska Carson appointed to sell major asset in popular evolving precinct
A major office and retail investment opportunity within one of the Melbourne CBD’s most dynamic and rapidly developing precincts is set to generate a buzz among both investors and developers when it hits the market in coming weeks.
Colliers International’s Daniel Wolman, Matt Stagg and John Marasco, in conjunction with Michael Ludski of Teska Carson, have been appointed to sell a 10-level office building with enormous retail frontage of over 51m at 438 Elizabeth Street in Melbourne on behalf of a private vendor.
The building has a net lettable area of around 13,812sqm and 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 approx $4.5million per annum and is well positioned for rental growth given Melbourne’s buoyant office leasing market.
“This offering represents an 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.
“This precinct is also the epicentre of high-rise residential apartment tower development in the Melbourne CBD, and this property offers excellent future development potential with a flexible Capital City 1 zoning and given it is one of the largest land offerings remaining in the Melbourne CBD."
Above: 438 Elizabeth Street, Melbourne
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 variety of residential apartment accommodation ranges from luxury skyscrapers, quality rental accommodation through to new purpose built student accommodation facilities,” he said.
“The university education sector is the City of Melbourne’s largest industry and occupier of real estate. 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 surrounding is was also well serviced by public transport, including Melbourne Central Train Station and the Queen Victoria Market tram interchange.
Mr Ludski said there was a distinct shortage of quality office buildings within the precinct, which would drive further competition for 438 Elizabeth Street.
“The low office vacancy rate in the precinct demonstrates the shortage of quality office buildings and the competition for scare sites from other sectors including education, student accommodation, retail and residential,” he said. “438 Elizabeth Street is strategically located to capitalise on the shortage of office accommodation within the area and as such we expect it will attract significant interest."
Mr Wolman said the building itself was in good condition, with solid foundations and very large and efficient floor plans.
“Floor layouts of this size and nature are very hard to come by in this pocket of the CBD and therefore the demand to occupy the offices has always been high for strong AAA tenants such as RMIT,” he said.
“Elizabeth Street is also known as one of Melbourne’s best retail strips and being positioned at the door step of the Queen Victoria Market only adds to the high level of foot traffic walking past this property. “In particular, the Asian grocer based at 438 Elizabeth Street is one of the busiest retailers in the area. The secure leases from both retail tenants and strong office tenants are expected to bring interest from investors both onshore and offshore."
The property is for sale by International Expressions of Interest closing Thursday June 30, 2016 at 3pm. Agents expect the property to attract interest in the vicinity of $80million.