Forza Capital sells Epson HQ for $6m
Forza Capital has flipped a Hawthorn East office after a renovation and re-let.
A local investor is paying $6 million for 90 Camberwell Road on a 4.65 per cent gross yield.
The vendor paid $4.6m in late 2018 and launched the leasing campaign earlier this year.
Japanese electronics giant Epson subsequently committed, paying starting annual rent of $279,000. The agreement includes fixed yearly 3.75pc rises.
In 2025, it will be presented with the first of two five year options.
The office is about eight kilometres east of Melbourne and contains 14 car parks.
Fitzroys marketing agent Paul Burns said the sale price reflects a per sqm rate of $9524 for the building and $7125, the land.
“The purchaser saw immense upside in the secure terms of the lease to a blue-chip tenant,” he added.
“Zoned Commercial 1, the property also offers excellent redevelopment potential for a much higher density development in the future – for either residential or commercial uses.
“Investors are continuing to actively source well located and income producing assets despite COVID-19,” the executive said.
“There is still strong demand for income producing assets, particularly given the historically low official cash rate and volatility in the stock market,” he added (story continues below).
“Commercial property is viewed as a stable alternative, and Melbourne’s reputation as an investment safe haven remains a compelling factor for assets such as this”.
Suburban office markets could soar while CBD sours
Echoing other leasing agents and tenant representatives this quarter, Mr Burns expects Melbourne’s suburban office markets to benefit from workplace changes set to follow COVID-19.
Amongst the possible new factors are employees working from home more; offices being used predominantly for meetings – and cutting rental costs without tightening workspace ratios.
This city’s inner eastern and southern markets have traditionally also been driven by their proximity to blue-ribbon suburbs – where the executives who own the businesses reside.
Mr Burns said these precincts “would continue to attract the attention of local and offshore investors alike, as the impact of COVID-19 creates more demand for offices closer to where employees live”.
“Even if a small percentage of CBD tenants choose to move away from the high-density CBD, this will have a big impact on the shallow pool of suburban office stock that is available and is likely to result in upward pressure on rents.
“Financial considerations in the current climate may encourage companies to take up space in the suburbs, which offer lower rents.
“The inner-east has an established catchment that has received strong enquiry for office space in recent months, and medium and high-density projects will continue to see more people living in the catchment.
“Fitzroys has recorded a strong uptick in enquiry from a range of tenants looking to move to the growing office markets of Hawthorn, Kew and Camberwell, and strong transaction results have been witnessed in these locations”.
