Queensland-based travel agency Flight Centre is bracing itself for a loss after deciding to sell the St Kilda Road office it bought at the peak of a market cycle 16 months ago.
Flight Centre says it is selling its 436 St Kilda Road headquarters to focus on its core retail and corporate travel businesses. But it will stay on at St Kilda Road as a tenant, agreeing to occupy about half the 7,500 square metre building for seven years upon settlement.
The ASX-listed company bought the part-vacant 11-level building for $31.3 million in December 2007, and relocated its staff from several locations, mostly from within the CBD.
It also spent a considerable amount renovating the majority of the building’s office area, of which 1,400 square metres is still available for lease.
Fitzroys selling agent Rob Harrington, who is marketing the building with Colliers International’s Pat Burke, said 436 St Kilda Road has the potential to earn an annual rental income of $2.45 million. He expects it to land in the portfolio of a private investor.
The agents would not comment on a price, however local agency sources are expecting between $25 and $30 million.
Elsewhere in the area, the ASX-listed Dexus Property Group has been trying to sell 509 St Kilda Road since last August for about $65 million. CB Richard Ellis is marketing that 19,687 square metre office, one of only a handful in St Kilda Road to back onto Fawkner Park.
Buildings that failed to sell in St Kilda Road recently include the Oracle building at 417 St Kilda Road, Kvaerner House at 600 St Kilda Road, and the former Cadbury Schweppes building at 636 St Kilda Road.