Swinburne University has listed a historic Melbourne CBD commercial building for which it paid $44 million last April – the last property trough.
Invicta House at 226-232 Flinders Lane was purchased to occupy, however with COVID-19 affecting the education and international travel sectors, will be liquidated.
The school picked up the asset just prior to the federal election – after which time the city’s commercial (and residential) real estate market rallied strongly, until March.
Many agents, pointing to low-yielding results, believe demand for certain prime property was not dented following the coronavirus being classified a pandemic.
However, with the national unemployment rate now speculated to peak at 9.25 per cent in December and a recession expected to be called official three months before then – it is unknown if demand for investments and development sites will dip in the second half of this year.
Last week, RMIT listed via a sale and leaseback the office component of its Building 108, at 235-251 Bourke Street, with price expectations of about $120m.
Eight months ago, University of Melbourne paid the Australian Red Cross $46m for neighbouring offices with development upside in inner north Carlton, also with the intention of occupying (that college might be watching what becomes of a similar valued property at 701 Swanston St, which hit the market nearly three weeks ago).
Swinburne is expected to break-even at Invicta House.
Invicta House at 226-232 Flinders Lane
A block from Flinders St Station and Federation Square, the seven storey building contains 6472 square metres of gross building area – about 65 per cent of which is lettable.
Victoria Police until recently rented three levels as its Melbourne East police station; the balance is tenanted to Greenhouse Backpackers.
Swinburne acquired Invicta House from the Lazarovits family – the owner of the latter business – paying $2.8m in 1998.
On a 742 square metre Capital 2 zoned plot, there is sky-rise redevelopment potential.
Any incoming owner could also increase the existing asset’s revenue by re-configuring ground floor space into retail – the building being in a shopping hotspot between Swanston and Elizabeth streets.
When the property was last for public sale, the agents proposed various development schemes including renovating the hostel into offices, and a small extension into the airspace (artist’s impression, top).
When contacted about a speculated disposal last month, a Swinburne spokeswoman said “the university maintains a diversified asset portfolio and at any time, in line with its investment strategy, may consider the sale of assets”.
This is an update of a shorter story published on July 4, prior to Swinburne University confirming a sale and marketing agency.