Any redevelopment on the site would offer unobstructed easterly views over Fawkner Park, and westerly views over the Albert Cricket Ground, Albert Reserve Tennis Centre, Albert Park Lake and Port Phillip Bay.
Leases to office tenants in the Aviva building expire at various stages over the next three to five years, sources say.
At a speculated sale price of $55 million, and annual rental of $5.5 million, the building would trade on a high yield of 10 per cent
Representatives from Dexus, and CB Richard Ellis which were marketing 509 St Kilda Road, declined to comment when contacted by BusinessDay.
News of a 509 St Kilda Road sale would follow that of the Victorian Police Headquarters building at 412 St Kilda Road, which sold in June for $42 million.
Mirvac, GE Capital and Flight Centre are amongst the other property owners trying to offload St Kilda Road towers at the moment.
Redevelopment of the Aviva building site would continue a trend of apartments replacing office buildings in the scenic tree-lined boulevard, which is often criticised for not having a designated train station limiting residents and visitors to the tram network, or car.
According to the Property Council of Australia’s most recent July 2009 Office Market Report, St Kilda Road now has 755,702 square metres of office space, compared to 871,342 square metres at its peak in July 1992.
According to reports, a century ago, the area’s Land Minister forced the wealthy identities who purchased St Kilda Road’s half acre blocks to build homes that were architectural masterpieces and of aristocratic proportions .
Only a handful of these mansions remain today, with many being demolished from the 1950s to make way for existing glass and brick office buildings, 8.9 per cent of which are now vacant, according to the PCA.