String of Lease Deals at Investa’s 485 LaTrobe Street

Investa is believed to be close to sealing about 16,700 square metres of lease deals at its 485 LaTrobe Street office complex, at the north-west tip of the CBD.

The deals will fill most of the office space vacated by CGU, a division of Insurance Australia Group, which recently relocated to new offices at 181 William Street. The former CGU space has been refurbished.

Opposite Flagstaff Gardens, 485 LaTrobe Street is a twin-tower, A-grade office complex with about 34,000square metres of office space.

Well placed industry sources say Slater & Gordon is in advanced negotiations to lease about 4500square metres at 485 LaTrobe Street. This couldn’t be confirmed with the law firm, which failed to return calls.

Catholic Church Insurances Limited, now based at 324 St Kilda Road, is understood to be leasing another 5000square metres, joining John Holland’s Bass Water division, which will occupy about 2200square metres in the south tower, sources say. Representatives for both tenants declined to comment.

BP Elite, represented by CB Richard Ellis, also declined to comment about speculation it will lease about 5000 square metres.

Investa, and leasing agents for the building, Knight Frank directors Mark Rasmussen and Michael Nunan, and Savills directors Phillip Cullity and Nicholas Farley, also declined to comment. Office rents at 485 LaTrobe Street were being advertised at $355 per square metre, per annum.

The surge in leasing activity supports recent Property Council of Australia stock and vacancy figures, showing a relatively strong take-up of office space in Melbourne despite the bleak global economic backdrop.

Overall, tenants in the Melbourne CBD leased 55,756square metres more office space than they vacated in the last six months of 2008.

Knight Frank Research says the rise in Melbourne’s CBD office vacancy rate – from 3.1 per cent to 4.8 per cent – came about because several part-vacant office developments, previously not classified because they were under construction, were added to the stock list.

Buildings classified for the first time include two office towers at the CBW development on the corner of Bourke and William streets, Northbank Place on Flinders Street and 737Bourke Street in Docklands.

Office developments put on ice last year because of financing shortfalls include buildings within the South-East Stadium Precinct at Docklands, and 567Collins Street, sources say.

Knight Frank expects Melbourne’s CBD office vacancy rate to trend upwards over the next 18 months, peaking in mid-2010. The agency says 16 CBD offices sold last year, totalling $502 million. This compares with 2007, when 20 buildings sold for $758.6 million.

Major CBD office buildings to sell so far this year include 461 Bourke Street for $34 million to Alan Finkel, and 473Bourke Street, which sold to the RACV for $42 million.

Burgess Rawson sales and leasing executive David Robertson, acting for RACV to buy 473Bourke Street, said the private investor vendors "were loathe to part with one of the most prized assets in their portfolio." He said negotiations started at $48 million, and were eventually whittled down, with the property selling on a low yield of 5.4 per cent, or about $4700 per square metre.

Investa was delisted from the ASX in 2007, after it was purchased by funds manager Morgan Stanley Real Estate.

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Marc Pallisco

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

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