Spencer Street office fetches c$325m

The Spencer Street office has doubled in value since 2016.

CBRE Investment Management is selling a prominent Melbourne office held for four and a half years.

The former Melbourne Water headquarters at 120 Spencer Street is trading to Singapore’s CapitaLand Investments, for the CapitaLand Open End Real Estate Fund, for c$325 million, reflecting a c5.4 per cent net market yield.

The vendor paid $250m for the 23 level, 32,074 square metre asset in September, 2017.

That seller, Anton Capital, also banked a major short-term capital gain acquiring the property from private investor Harry Stamoulis for $165.2m 16 months earlier.

CBRE Investment Management appointed CBRE’s Kiran Pillai and Scott McGlone and Cushman & Wakefield’s Nick Rathgeber, Leigh Melbourne, Josh Cullen and Mark Hansen, to market the asset in February; all agents declined to comment.

Their sale comes eight months since Lendlease offloaded 699 Collins St, in Docklands, on a funds through basis to the National Pension Service of Korea for $1.2 billion in what was the biggest single Australian office deal last year.

Diagonally adjacent to 120 Spencer St, and also to rise 34 floors, that asset will contain c70,000 sqm of area.

Elsewhere in the pocket, last month, MECGP Asia listed a nine storey, 17,239 sqm office at 850 Collins St, Docklands, with a $200m-plus guide (story continues below).

CBRE Investment Management spent $30 million renovating 120 Spencer Street.

Valuable airspace

CBRE IM offered 120 Spencer St, at the south east corner of Little Collins, following a $30m capital works initiative – it is 2.5pc vacant with a Weighted Average Lease Expiry of 6.8 years.

Agents promoted to potential for the 120 Spencer Street lobby to be activated with additional retail.

Major tenants include CQU Australia, Redhill Education and WeWork – the latter which has signage rights.

Constructed nearly 50 years ago, the asset also has valuable airspace – one holding north of Collins St, surrounded by taller towers, the 2915 sqm site offers significant long-term development upside.

Unusually for a CBD offering, it presently also provides Victoria Harbour view security – over the train station and Marvel Stadium.

This story was updated in June with the buyer.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.