Suburban Office Sales Boom

Three suburban office buildings in Melbourne’s eastern suburbs have been sold, or are close to sale, in deals worth more than $40 million.

The biggest sale is a 5-level office building at 436 Elgar Road in Box Hill, which sold to an as-yet undisclosed institutional investor for a price believed to be around $20 million, on a yield of around 6.5 per cent.

The sale price returns a healthy capital gain for vendor Charter Hall Investment Fund No 6, which paid $14.56 million for the A-grade office building in late 2004.

The fully leased building includes almost 6000 square metres of office space over three levels, and two levels of car parking for 201 cars. It is on the corner of Prospect Street which, along with Whitehorse Road, is one of the Box Hill market’s biggest suburban office locations.

The building was being marketed by Colliers International and CB Richard Ellis. Representatives from both agencies declined to comment when contacted by The Age.

Meanwhile in Hawthorn, private developer Bruce Tilley is believed to be formalising plans to purchase a development site at 293 – 311 Burwood Road, near the corner of Glenferrie Road.

Currently a B-grade office building, the property sits on 3600 square metres of land and is expected to be developed into an office building.

Tilley’s company, First State Developments, is developing a13,000 square metre office building at 109 Burwood Road Hawthorn. The building is the biggest suburban office building to start construction without a tenant.

First State Developments recently paid around $14 million for a development site with frontage to Bank Street and Dorcas Road in South Melbourne. The site is expected to be developed into a mixed use retail and residential project.

The company is also developing a seven-storey commercial and residential development in Camberwell, to be anchored by Coles, and an apartment project in Port Melbourne.

First State Developments declined to comment when contacted by The Age.

In Camberwell, listed property group Trinity has sold an office building it held on to for just 18 months, in a deal worth $11 million.

It paid $9.9 million for the 3-level 2680 square metre office building early last year.

CB Ricard Ellis senior associate director of metropolitan investments Justin Clarkson, who marketed the property, said the sale price reflected a yield of 7 per cent, and a high rate per square metre of $4100.

The property is fully leased to four tenants including Australian Homecare Services and Hungry Jacks.

“Demand for suburban offices in Melbourne is at an all time high with record prices being achieved,” said Mr Clarkson. “The purchaser was frustrated by the lack of passive opportunities in the market and they purchased this well let property with a long term view.”

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