Colliers International concludes 324 St Kilda Road leasing campaign
St Kilda Road is resurging in popularity, having experienced an influx of major businesses migrating to the precinct in the past 12 months.
A growing number of national and international companies have relocated to the city-fringe boulevard, including advertising agency Big Red from Prahran, Just Group from Richmond, Deluxe from South Melbourne and Monash University from various locations.
Colliers International’s city-fringe office leasing experts Ben McKendry, Vincent Tran and Matt Cosgrave believe the motive lies in the St Kilda Road precinct’s proximity to the CBD, the high-quality and cost-effective leasing opportunities that have recently become available, and the standard of surrounding amenity.
Alongside Thorburn Property’s Kenny Thorburn, they have concluded a successful leasing campaign for Perth-based landlord Lester Group’s office asset, 324 St Kilda Road, securing three tenants for 4,500sqm across five floors, previously leased to Target.
“The successful leasing campaign has vindicated our decision and belief in St Kilda road four years ago when we acquired the building,” Lester Group’s Russell Lester said.
“We constantly strive to maximise returns for our investors and are delighted to have this property fully leased.”
Sales solutions provider The SMART Group has relocated from Richmond, committing to levels two and six; waste, water and energy solutions provider Veolia has relocated from South Melbourne, committing to level five; and claims management solutions provider Crawford & Company has relocated from Southbank, committing to levels three and four.
“All three tenants are new to St Kilda Road and are just some of the major businesses we’re seeing setting up in the area,” Mr Cosgrave said.
“324 St Kilda Road is now 100 per cent leased following Target’s relocation to Geelong mid last year, which left Colliers International and Thorburn Property with five floors to lease, each measuring 918sqm,” Mr Tran said.
“The three deals were completed at circa $450 gross per sqm, with multiple options to renew the respective lease terms.”
Mr Cosgrave said Colliers International and Thorburn Property had implemented a floor-by-floor spec fitout strategy at 324 St Kilda Road, which proved to be a major drawcard for the new tenants.
“This approach saw immediate interest generated from large multi-nationals seeking an affordable relocation solution within close proximity of the CBD and public transport,” he said.
Further reinforcing the precinct’s strong standing within the city-fringe office market, several large multi-national businesses already present on St Kilda Road have opted to remain there, with Macquarie Leasing, WPP and Frasers Property Australia recently renewing their leases.
“Macquarie Leasing has occupied circa 1,100sqm at 432 St Kilda Road for the past seven years and has just expanded into 1,720sqm at 464 St Kilda Road,” Mr Thorburn said.
“Publicly listed marketing and PR company WPP has renewed its 4,000sqm lease at 380 St Kilda Road for five years, while Frasers Property Australia has also renewed its St Kilda Road tenancy for 10 years.
“The strong inward migration to the precinct is testament to its long-term market fundamentals and desirability as a location for large multi-nationals and international corporations.”
Mr McKendry said the current PCA vacancy figures did not reflect the vacancy reality of the St Kilda Road market, with vacancy sitting at its lowest in years.
“Owners are capitalising on steady demand and the limited options of more than 1,000sqm, allowing for strong face rental growth,” he said.