Five weeks after Australian Unity vacated its long-time South Melbourne headquarters – an office it plans to redevelop as a vertical retirement village – a property behind it has hit the market for sale.
Any acquisition of 71-73 Palmerston Crescent, for sale via Colliers International, could expand AU’s landbank by 818 square metres.
It would also provide AU some development-upside: it can extend its proposed retirement complex into what would be ‘set-back’ land behind the neighbouring structure.
Presently, 71-73 Palmerston Crescent contains a five-storey office with 2711 sqm of lettable area and 40 basement car parks.
Being on the south-side of the street, the Commercial 1 zoned land could make way for tall buildings, including an apartment tower, student accommodation complex, hotel or office.
Any proposed high-rise development would capture north-facing views of the rooftop of homes on the north-side of Palmerston Crescent, which are not zoned for large-scale buildings.
Raglan Street, which is the extension of Palmerston Crescent, has the same strategic point of difference: view security.
Broker Daniel Wolman said the “landmark freehold is expected to generate significant interest from a diverse range of local and offshore groups due to its premium location, flexibility of future use” and the surge in sentiment following the federal election and recent fiscal policy changes.
“There are very few remaining opportunities of this scale within the South Melbourne office precinct, as properties of this nature very rarely come to market.
“71-73 Palmerston presents an unparalleled opportunity,” Mr Wolman said. “With a range of national commercial office tenants and a ground floor café, the property benefits from diversified income streams”.
The agent said the significant rental and development upside makes this property suitable for multiple buying groups with varying real estate strategies.
Owner occupiers, which have been predominant in the property market especially over the past three years, are expected to show an interest.
Mr Stagg said the area around the office remains “one of the most popular” for commercial occupiers.
“The Melbourne CBD, St Kilda Road and Southbank are readily accessible by tram from the property, whilst the Royal Botanic Gardens, Albert Park Lake, Shrine of Remembrance are all within walking distance,” he added.
“The immediate area is also set to benefit from construction of the new Anzac train station located at the Albert and Domain road intersection.”
The agency points to state government research predicting that Anzac Station will provide access to approximately 33,000 jobs and service 17,000 residents living within 800 metres of it, by 2031.
“Due to the levels of activity taking place in the immediate area and the strong rental growth potential, opportunities of this kind are rare and we are anticipating a hot contest when this hits the market,” Mr Wolman said.
The brokers expect 71-73 Palmerston Crescent to sell for more than $15 million.
Australian Unity developments
The property’s high-profile neighbour, Australian Unity, is, meanwhile, about to begin construction of a major aged-care development, The Grace Park Albert Lake, which will replace two offices it owns between 114-130 Albert Street, at the top of Albert Park Lake.
A new high-rise aged-care building is set to be built on one of the AU blocks.
The office next door, which until recently was AU’s headquarters, is being reconfigured as a vertical retirement village.
AU meanwhile has relocated its offices to the city at 271 Spring Street, an investment recently completed by ISPT.
Coincidentally, and as we reported, AU last week agreed to sell a half-share of the Waurn Ponds Shopping Centre in Geelong to ISPT, the other half-share owner, for a speculated price of more than $140 million.