South Korea’s National Pension Service in for c$300m payday from sale of Melbourne CBD office

The complex at 595 Collins Street includes a child-care centre.

South Korea’s National Pension Service is offering for sale what could be only the fourth Melbourne CBD holding to sell for a nine-figure sum this year.

The asset, 595 Collins Street (pictured, top), near the city’s south-west tip, would return a fully-leased annual rental return of $15 million (it is currently 96 per cent leased).

It sits on a near-4000 square metre site which would make it a target for residential developers.

The sale price is expected to exceed $300 million.

The vendor acquired the asset in 2011 in a deal which valued it at $130 million.

“We expect 595 Collins Street to have wide appeal to groups seeking to capitalise on Melbourne’s strong market conditions and underlying fundamentals,” CBRE marketing agent Neva Courts, who is marketing the building with colleague Luke Etherington and JLL’s Leigh Melbourne, Nick Rathgeber and Paul Kempton, said.

“The Melbourne office market is experiencing unprecedented purchaser demand, with investors focusing on the city’s booming population, limited future office supply and strong rental growth forecasts”.

It “represents a rare opportunity to landbank a freehold site of almost 4000 square metres in the CBD’s prestigious Collins Street,” Mr Melbourne added.

The 17-storey office, with close to 32,000 sqm of lettable area, is anchored by the state and commonwealth government.

It recently underwent a $20 million refurbishment which included the addition of three ground floor retail assets fronting Collins Street.

A landmark hotel penned by the firm of late architect Zaha Hadid is mooted for 600 Collins Street in this pocket of the city which is also close to the Southern Cross train station and Yarra River.

Only three office deals worth more than $100 million have been struck in the Melbourne CBD this year.

Three weeks ago, Dexus paid $160 million for 60 Collins Street, on a tight 2.9 per cent yield. It additionally spent $70 million to acquire the neighbouring office, 52 Collins Street, creating an amalgamated c2000 sqm land holding it intends to replace with an office.

Early last month, Mirvac paid residential developer Sterling Global $122 million for a low-rise office at 383 La Trobe Street. Offered with a permit to make way for a 70-storey apartment tower, Mirvac is also intending to replace this 2850 sqm site with an office.

Earlier this year, CBUS Property Group paid just over $170 million for four amalgamated commercial buildings at the corner of Bourke and Queen streets.

Marc Pallisco

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

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