One of three West Melbourne properties until recently earmarked to form part of a mixed-use office and hotel complex has sold for $38.5 million.
AVARI Capital Partners intends to refurbish and re-let the heritage protected Sands and McDougall warehouse converted office at 355 Spencer Street.
The six storey red brick building contains 7362 square metres of area and sits on a 2000 sqm plot at the north west corner of Jeffcott Street.
In recent years it was proposed to form part of a redevelopment with 102-108 Jeffcott Street – a site which the vendors, Ozzie Kheir, Phil Mehrten and Frank Palazzo sold last week for $9.5 million and is earmarked, now, for a high rise residential tower.
The third parcel incorporated into the redevelopment plan, 371 Spencer Street, which was also listed earlier this year, is now for private sale asking $10 million.
This result would return the vendors about $58 million – a rise on the $38.8 million they paid five years ago for the trio of sites.
When the three blocks were listed, the price expectation was about $75 million.
Sell-down ends mixed-use development plan
The marketing campaign for the property targeted developers which might consider buying the lot and exercising the permit for a 23-storey hotel connected via a skybridge to 355 Street, which like 371 Spencer Street, was set to be fit out with commercial space.
Instead two of the sites found favour with separate buyers.
The vendors paid $27.2 million for the 355 Spencer Street component.
AVARI founder and chief investment officer Alan Liao said its acquisition was part company plans to add value to real estate investments.
The executive described 355 Spencer Street as “a structurally sound, superbly designed and aesthetically pleasing building” which “to knock down and re-develop would not achieve its highest and best use”.
“We will run an extensive refurbishment program including an internal spec fit-out, service upgrades and add end-of trip facilities. We will also activate the central courtyard with a cafe or small bar to provide tenants with an attractive communal space.
“We believe this unique proposition will attract strong leasing interest and will ultimately improve the value of a magnificent building,’’ Mr Liao added.