Brendan Sullivan pays $17.8 million for mostly vacant inner south Melbourne office built by and for Lindsay Fox

Private investor Brendan Sullivan has purchased his second office in four months.

At 1 Bowen Crescent in Melbourne, which is defined by the Property Council of Australia as being part of the St Kilda Road commercial precinct (and has a postcode of 3004, which is different to the city), the majority vacant asset is expected to be re-positioned with a makeover – a practice for which Mr Sullivan has a track record.

Rising seven levels and with 2686 square metres of area, the building is near the Anzac Station, being constructed as part of the $11 billion Metro Rail project, set to open in 2025.

It is also walking distance to the Shrine of Remembrance and Royal Botanic Gardens.

The Melbourne CBD is about two kilometres away.

CBRE’s Josh Rutman, Mark Wizel, Lewis Tong and Scott Orchard sold the office to Mr Sullivan “immediately following” the close of an expressions interest campaign on October 10.

It is trading for $17.8 million.

The vendor, IT entrepreneur and philanthropist Malcolme Freak, paid $13.575 million for it in 2017.

Part of the renovated space is for rent at present. It is expected Mr Sullivan will continue with this leasing campaign, possibly refurbishing more of the existing area.

The office was built by Lindsay Fox as the headquarters for his Linfox trucking empire.

Mr Fox later relocated to 490 St Kilda Road – an office which, coincidentally, he is set to move out from shortly, to allow for a residential conversion he recently pushed through planning.

Part of 1 Bowen Crescent, including this office which is for lease, has been recently renovated.

Plenty of options with empty buildings

Mr Rutman said vacant building sales “are the purest test of investor confidence in a market, especially given the amount of equity required for such a transaction.”

“Despite some concerns about the impact of the disruptions from the construction of the new train station, the result is another example of great investor confidence for the St Kilda Road precinct, which is enjoying a resurgence towards office use after years of reversion to residential”.

Buildings like 1 Bowen Crescent with low occupancy – or better yet, which are fully vacant – provide investors with plenty of options – profits to be made from, amongst other things, capital value and rental windfalls, as well as tax savings.

Mr Sullivan has taken on several in this city – including one not far from 1 Bowen Crescent – at 163-165 Eastern Road, South Melbourne, which was acquired in late 2016 for $13.5 million (and is currently for lease following a major renovation).

In 2015, the investor fully leased an office at 327-333 Police Road, Mulgrave, which had been vacant for 24 years.

The so-called East Building, and its sister West Building next door, was acquired by Mr Sullivan for $8.65 million in late 2014. East Building was 50 per cent vacant and had an abysmal leasing record.

Interestingly, Mr Sullivan didn’t renovate the Mulgrave office before leasing it.

In 2011, the private investor paid the Smorgon family $16.35 million for the five-level Katherine Square properties between 517-535 Flinders Lane in the city, near Rialto Towers.

Mr Sullivan then refurbished, rebranded (to The Edition), strata titled and in 2017 starting selling sold-down the mixed-use complex as 41 investments (14 being retail).

One of these, a relatively large 174 sqm shop now known as 16 Katherine Place, sold last week for $2.6 million.

The sell-down windfall has been speculated at more than $60 million.

Earlier this year, the investor listed Melbourne Water’s former headquarters at 122-130 Wellington Parade in East Melbourne, for about $40 million.

Mr Sullivan acquired this office for $7.4 million in 2005, undertaking a major renovation which included adding a top-floor penthouse.

Other Sullivan Property Group deals

Brendan Sullivan paid more than $8 million for 428 Toorak Road, South Yarra, in August, 2019.

In August Mr Sullivan paid more than $8 million for a two-storey art deco office and retail investment at 428 Toorak Road, South Yarra (pictured, above).

In 2012, Mr Sullivan banked $4.1 million selling 755-757 Burke Road, Camberwell, which cost him $1.4 million in 2001, along with the neighbouring #759.

Elsewhere in the St Kilda Road precinct

Interestingly, one of the the largest recent deals in the St Kilda Road commercial precinct was a house: Landene, at #490 is the last historic mansion on the street to be occupied as a residence. It sold to another private occupier for $8.25 million in August.

Australia Post formerly owner-occupied that building (pictured, bottom, after a residential refurbishment).

In June, we reported that Hong Kong’s Mars family outlaid $70 million for a six storey office known as Iloura Plaza on a triple fronted block at 424-426 St Kilda Road.

At the same time as it was buying Iloura Plaza, we reported that the family was in negotiations to buy the office across the road (420 St Kilda Road) for about $98 million.

Landene is believed to be the last mansion in St Kilda Road occupied as a residence.

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Marc Pallisco

A freelance property analyst and journalist, Marc is a co-founder of realestatesource.com.au.

Marc Pallisco
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