Leighton Properties manager, Bill Beck, said its new project at 294 Bay Road will be the developer’s first strata office foray in Victoria.
“We sold land near our com.park development in Mulgrave to (developer) CGA Bryson some years ago, who went on to develop a successful strata office project,” said Mr Beck. “There’s ample evidence to suggest buyer demand exists for strata offices in the suburbs, and we thought Cheltenham was a good site to develop some on.”
Jones Lang LaSalle sales executive Neil Meadows, who is marketing three strata office projects, says rising suburban office rents, the imminent opening of Eastlink and demand for small businesses to work “closer to home” are factors driving tenant demand for strata offices.
He said stage one of MAB Corporation’s Southjunction project in Moorabbin – a redevelopment of the former Kingston City Council offices – is sold out, while at Pellicano’s Drive 26-office suite project, “only a few suites” remain for sale.
He said prices achieved for another strata office project in Mount Waverley, a joint venture between Corporate Executive Offices and developer Charles Lloyd, has “set a new benchmark” for suburban office sales rates in the area, selling for more than $5500 per square metre.
Mr Meadows says at present, there is no consistency in the mix between owner occupiers, and investors for the suites.
“Most of Pellicano’s Drive project sold to investors, while most of the suites at CEO’s Mt Waverley project have sold to owner occupiers,” he said.
He said the recent residential real estate boom is driving a wave of investors into the strata office market, where office suites often start at less than $200,000.
“Residential investors frustrated at the high price of housing can enter the strata office market at a lower price point and achieve net returns in the order of 6 – 7 per cent, which is far better than the net return of around 2 – 3 per cent for residential property.”