A historic Art Deco building owned for 63 years until 2011 by members of the wealthy Lechte family is for sale.
The Francis Hotel at 383-387 Lonsdale Street is expected to trade for more than $12 million.
At the north east corner of Niagara Lane, the three storey complex contains 1029 square metres of area, fully leased to Club Retro, which pays annual rent of $542,788.
The building occupies a Capital City 1 zoned 444 square metre plot with airspace development potential.
The block size was 385 sqm this time last year, before the owners acquired a neighbouring laneway – again from the Lechte family – for about $600,000. This laneway (which the incoming owner of 383-387 Lonsdale Street has the right to name) – sold two weeks prior to the close of an expressions of interest campaign managed by Colliers International’s Oliver Hay, David Sia and Chris Ling.
Investors, developers and land bankers are expected to show the most interest.
“The long lease with options to a powerhouse tenant is appealing especially to investors with long term views, in no rush the develop the asset anytime soon. Corner assets in such prime locations rarely make their way on the market, as expected, enquiries have been through the roof,” Mr Sia said.
Mr Hay added that opportunities on Melbourne CBD corners are tightly held “with the number of CBD transactions almost half of what it was last year”.
The site has multiple street frontages and immediate access to the Bourke Street Mall, Emporium Melbourne, the GPO building (now occupied by H&M) and Melbourne Central.
The brokers said that more than $3 billion worth of landmark developments are being constructed in the area including Brady Group’s residential redevelopment of 380 Lonsdale Street, National Australia Bank’s next office headquarters, at 405 Bourke Street, and Cbus Property’s $1 billion commercial project at 435 Bourke Street.
Hunger for small buildings a hallmark of the current Melbourne CBD investment market
For 12 months, we’ve been reporting about demand for small and historic Melbourne city buildings rising beyond expectation.
Last November – a particularly depressed time in local property circles – the Liberal Party of Australia banked $37.1 million selling the four-level Centenary Hall building, also on a 444 square metre plot, to luxury watch maker Rolex, which plans to owner-occupy.
Centenary Hall was carrying a c$30 million price guide.
At about the same time, we reported that Figtree Holdings sold the Duke of Kent Hotel for $35 million – almost twice the $17.4 million it paid three years earlier.
Also late last year, an Asia-based investor made a knock-out offer of $18 million to snare 363 King Street, West Melbourne, prior to the close of an expressions of interest campaign. This property, on a 1112 sqm site, hit the market with price expectations of $16 million.
Last December, a Malaysia-based buyer paid $8.6 million for a brick warehouse at 438 Queen Street – a deal which reflected a 1 per cent yield, and a substantial capital gain for the vendor, private investor David Tweed, who paid $3.8 million for it in 2013.
Demand for these types of assets intensified even more this year.
In June, the Uniting Church of Australia banked a reported $43 million – some $8 million over expectations – selling a six-level office at 130 Little Collins Street to Jeff Xu’s Golden Age Group. Owned for 52 years by the church, the 651 sqm site was offered permit-ready for a 26-storey hotel
Two adjoining buildings sold for $12 million over their initial price guide, also in June: Melbourne businessman Rob Phillpot outmuscling the Melbourne Club to pay $22.35 million for 37 and 39-41 Little Collins Street.
Elsewhere in the city this year:
- Swinburne University paid $45 million for Invicta House at 226-232 Flinders Lane, to occupy as a campus;
- A 1960s building at 45 Exhibition Street, on a 344 square metre parcel of land, sold for well over $20 million;
- Real estate agent Tony Tai was part of a consortium to sell an even new building, 212-224 King Street, for $21 million. The vendors paid $3.2 million for this triple-storey investment in 2004.
In July, Orion International Group listed Swann House, at 22 William Street, on an 826 sqm site between Cbus Property’s landmark Collins Arch, which is under construction, and the historic Immigration Museum.
The 12-storey 5700 sqm Swann House, built in 1921 on the site where John Pascoe Fawkner established his first Melbourne home in the 1830s, hit the market with c$45 million price hopes.
The deals for Duke of Kent, 104 Exhibition Street, 363 King Street, 130 Little Collins Street, 438 Queen Street, 37, 39-41 Little Collins Street, 212 King Street and 45 Exhibition Street were transacted by Mr Hay, Mr Wolman, Mr Sia and Mr Stagg.