Bill McNee’s Vicland Property Group has started construction of a major South Yarra office on a speculative basis.
The nine-level, 6295 square metre building at 11-13 Wilson Street (artist’s impression, top) is due for completion in the third quarter of next year.
With an estimated end value of $100 million, Mr McNee is developing the office without bank funding.
The move puts Vicland in the box seat for prospective tenant suitors, with several of the other South Yarra offices recently unveiled still seeking pre-commitment and having no firm start or end date.
CBRE and Colliers International are handling the leasing campaign.
As we reported in April, the size of South Yarra’s office market is set to almost double by 2023. Melbourne’s city fringe office vacancy rate is currently a low 4.5 per cent.
The 1125 sqm holding previously accommodated a three-storey car park.
Outside of the Melbourne CBD, South Yarra, along with South Melbourne and Cremorne, command the city’s highest average office rents – premium product speculated by agents to exceed $650 per square metre, per annum.
Vicland development manager, Jake Steinhart said that while Cremorne has been receiving recent attention as a boutique employment precinct, South Yarra has the same drivers, including a shortage of supply, and pent-up demand.
“South Yarra and in particular Wilson Street benefits from having access to a high-quality demographic of professionals, better-to-none amenity and public transport which includes two train stations as well as trams and buses”.
The Wilson Street office is the second commercial building Bill McNee has won approval to build in South Yarra recently.
Last October, we reported, exclusively, that Vicland would also construct a mixed-use complex on airspace atop train lines opposite the South Yarra station.
Newmark Capital acquired 11-13 Wilson Street when it paid $165 million for the Jam Factory shopping centre in 2016.
Last year, Newmark Capital won approval to replace Jam Factory airspace with four buildings, the tallest rising 17-levels, and set to contain a total of about 50,000 sqm of offices.
In the immediate area surrounding the Jam Factory, the Spotlight Property Group has mooted to replace 402-416 Chapel Street, South Yarra, with a mixed-use complex containing a 10-storey hotel, set to be managed by Starwood Hotels & Resorts as an Aloft.
An eight-level residential building is also proposed for 430-438 Chapel Street – a site for decades known as the Chapel Street Huts.
This site’s co-owners, Franze Developments and Sampiere Group, paid $11 million for the c800 square metre Chapel Street Huts site following an off-market negotiation in 2017 with the former owners, the Penprazes family, which had owned it for about five decades.
Elsewhere in the suburb, Goldfields is proposing a 24-level office at 627 Chapel Street, South Yarra.
Goldfields acquired 627 Chapel Street for $50 million in 2017 from Fridcorp which had earmarked it for a 38-storey apartment building.