Fund manager Australian Securities Limited has sold a suburban Melbourne office for $10.3 million – nearly doubling its 2014 outlay.
The double-storey building at 269 Centre Road, Bentleigh, about 13 kilometres south-east of the CBD, includes 1698 square metres of floor area and 36 car spaces.
The office sits on a holding of 1543 square metres with the potential for redevelopment, either into the airspace, or as a new complex. Zoned Commercial 1, the plot could be considered for a residential project.
The agents touted the relatively short weighted-average-lease-expiry period (1.92 years) and “underlying land value” as part of a campaign launched in October.
They also promoted the investment credentials of 269 Centre Road, Bentleigh – the modern building is fully leased to seven tenants, including Buxton Real Estate.
Following “a highly competitive” campaign, the office was purchased by a Melbourne-based family.
“During a holding period of only four years, [Australian Securities Limited] has managed to see an 85 per cent increase in capital value,” Mr Ryan said.
“The metrics of the deal include a building sale rate per square metre of $6,066 and a passing net yield of 4.23 per cent.
Melbourne’s suburban office market “has been one of the strongest performing sectors in 2018. With bank lending being far more favourable in this sector, investors came in droves to try and secure the purchase of 269 Centre Road,” Mr Ryan said.
“With market sentiment over the future of the residential sector waning, investor are prepared to pay top dollar for a risk adverse asset. This is further supported by the growth in the metropolitan office leasing sector, creating a strong rental reversion opportunity for 269 Centre Road, Bentleigh.