‘5-star’ Melbourne city fringe office carries c$50m price hopes

The Sackville Street office returns annual rent of just over $3 million.

After just completing one of the city fringe’s highest quality offices – while finding tenants to lease it – Willy Brouze’s Ricdanic has decided to sell.

The Collingwood building contains 5341 square metres of high end space.

The “5-star” building at 1 Sackville Street, Collingwood – one holding from the Smith Street retail strip, which in this part of town is the Fitzroy suburb border – is expected to trade for more than $50 million – a sub six per cent yield.

A wellness room at 1 Sackville Street.

With 5341 square metres over nine floors – rated Prime grade, the second best after Premium but better than A – the property also includes a two level, 61-bay basement car park.

The activated rooftop at 1 Sackville Street.

There is a double height entrance foyer with a mezzanine too – potentially able to accommodate more lettable area longer term – a wellness room and rooftop terrace.

Langridge Lanes, with 6000 square metres, recently sold for $77.5 million.

Another Collingwood deal

With a pathway to a 5-star NABERs rating, 1 Sackville St is one of the city’s new age ‘eco-friendly’ offerings, with a swag of sustainability initiatives, according to Cushman & Wakefield’s Daniel Wolman, who is marketing the property with Oliver Hay.

Amongst them, he added, are touchless technologies including smart phone operated lift call buttons.

Any incoming owner will also be able to claim significant depreciation benefits, they added.

The listing comes a year since the Victorian Aboriginal Community Controlled Health Organisation, or VACCHO, outlaid $16.5m for a row of properties between 34-50 Sackville St – an investment for now, with long term development upside.

Also 12 months ago, Joseph Chahin’s Peregrine Projects sold the new Langridge Lanes office project in the suburb – with c6000 sqm – for $77.5m, to DWS, the local arm of Frankfurt listed DWS International GmbH.

Meanwhile in Collingwood leasing circles, the Liberman family last year secured Launch Housing, the Yoorook Justice Commission, Expressions Australia and Today Design to 54 Wellington St, Collingwood.

They will join Bank Australia which committed to that building during construction in 2021.

Last month meanwhile Starbucks leased part of a Hines office, also on that street, for its headquarters (story continues below).

The Collingwood office (marked), two kilometres north east of Melbourne.

Eco-friendly offering at Fitzroy border

Healthcare software group Epic Systems – which has an intergalactic themed Wisconsin headquarters – anchors 1 Sackville St, with 54pc of the area and 32 car parks.

Local outfit Linktree, which also owner occupies in Collingwood, rents 1564 sqm, including the penthouse floor, and 19 car parks.

Media group BirdDog meanwhile is committed to 549 sqm (10pc); it is also on the longest lease – an initial eight years.

Combined with a 65 sqm ground floor space occupied by Café Le Reve, the asset’s weighted average lease expiry by income will be 3.6 years as of this November.

“This property is a lucrative opportunity due to high calibre tenants and being a highly functional and sustainable building situated within a thriving Melbourne location,” Mr Hay said.

“With public transport in close proximity via trams, trains or buses, and access to the Eastern Freeway, Sackville St is helping rewrite Collingwood’s commercial market as the suburb for tech and creative companies, so we are seeing a lot of interest from investors looking to attract these type of tenants,” he added.

“Furthermore, investors who are interested in sustainable and environmentally friendly buildings may be drawn to Collingwood, as there is a growing trend toward eco-friendly offices and buildings in this area,” according to the executive.

Dale Brouze, development and project manager of Brighton East based Ricdanic, said the leasing campaign attracted a younger generation of prospective tenants, wanting to be near the Smith St strip.

“During COVID, people stayed at home and missed out on the social infrastructure of an office environment,” he added. “Now they want work to be similar to home style living…in close proximity to shopping, food and transport”.

Tenancies between 400-800 sqm have been created. The Commercial 2 zoned site spreads 933 sqm.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.