785-789 Toorak Road Hawthorn East sold by IOOF
A prominent two-storey office building at 785-789 Toorak Road in Hawthorn East has sold to a local syndicate for $24.65 million on a passing yield of 5.5 %.
The sale of the office asset, which has a net lettable area of 4,006 sqm and is 94 per cent leased to seven high-profile tenants, was negotiated by Colliers International in conjunction with JLL on behalf of IOOF.
“Throughout the Expressions of Interest campaign we received significant interest from local private investors and syndicates, culminating in eight offers,” said Peter Bremner, National Director, Melbourne Metro Sales at Colliers International.
“Following the close of the EoI, contracts were exchanged in less than a week which shows prospective buyers had done their homework and were well placed to bid unconditionally for this stunning office investment."
The sale price of $24.65 million equates to a capital rate of $6,150 per sqm on an asset with secure returns and limited capital expenditure required.
“After 17 years of ownership and a recent refurbishment, the timing was right to take advantage of a strong office leasing market in Hawthorn and divest while the building was close to 100% leased,” said Simon Gross, Senior Asset Manager at IOOF.
The purchaser is a local syndicate with property interests in the immediate area who were attracted to the property by the quality of the existing building, the potential future rent reversion, and the flexibility of the office space to cater for tenants of all sizes.
“The building has enjoyed a long history of near 100% occupancy and tenants are attracted to the location due to the accessibility to the Monash Freeway only 300 metres away, together with the amenity provided by the nearby Stockland Tooronga Shopping Centre,” said Josh Tebb, Director, Investment Sales at JLL.
“With average net passing rents in the building equating to less than $300/sqm pa, buyers recognised the future rent reversion potential with current net market rents for office space in Hawthorn East being estimated closer to $350/sqm pa,” said Rob Joyes, National Director, Capital Markets & Office Leasing at Colliers International.
“The property had further appeal to buyers looking at the long-term play and land rich nature of the property which is zoned Mixed Use and allows up to 6 levels of residential accommodation (STCA),” said Marcus Quinn, Director, Metropolitan Sales and Investment at JLL.