Collective Capital, which last year picked up the former Dennis Family Homes headquarters in Malvern East as a permit-ready development opportunity – but instead renovated it – has signed two lease deals reflecting a 35 per cent rental uplift.
The 203-207 Waverley Road office, still known as Dennis House, has commanded $370-380 per square metre, per annum, net.
This compares to $280 per sqm, pa, prior to the renovation, according to the leasing agent, JLL’s Joshua Tebb.
Civil engineering group Verve Projects has taken a quarter of the 2200 sqm double storey building with 71 basement car parks.
Verve’s agreement – for an initial five year term – will see it vacate a quality headquarters at nearby 173 Burke Road, Glen Iris (an office coincidentally listed for sale last week).
The second new tenant at 203-207 Waverley Road, Mayfield Aged Care, will occupy about 300 sqm.
Mr Tebb and colleague Matt Brown-Greaves represented Collective Capital. The agent’s marketing campaign also offers naming rights.
Renovation wasn’t the first attempt to add value to 203-207 Waverley Road
Dennis Family Homes built 203-207 Waverley Road in 1989.
It sold the office to Momentum Wealth Management for $7.85 million in 2013 with a five year leaseback.
At the time of that sale, the 1622 sqm holding on the north east corner of Emo Road was zoned Business 2.
It was subsequently gazetted Commercial 1 – allowing Momentum to get a permit for a four-storey mixed-use project containing 44 apartments.
Momentum offered the Malvern East complex for sale in 2018, spruiking its flexibility as an investment with development upside.
Collective Capital, which paid a speculated $13 million, instead decided to retain and renovate the existing structure, capitalising on the region’s low office vacancy rates and rising rents.
The four level redevelopment permit has since lapsed.
Mr Tebb said the landlord’s strategy has paid off, with demand for quality office space in the Malvern East area unmet by supply.
The agency puts office vacancy rate in the region at less than 2 per cent.
Average A-grade rents, Mr Tebb added, have increased about 30 per cent since 2016.
Elsewhere in the suburb, Vicinity Centres and John Gandel are planning to construct a $130 million, nine-storey 20,000 sqm office, as part of a $685 million refurbishment of the Chadstone Shopping Centre.