Syndicate buys office to renovate in South Melbourne development hotspot

A Melbourne syndicate is speculated to be paying c$14 million for a five-storey office in a development hotspot near the top of Albert Park Lake.

The South Melbourne asset, 71-73 Palmerston Crescent, was purchased as a value-add play.

With a low weighted average lease expiry, it will now undergo a major refurbishment.

The brick building neighbours a site earmarked for a nine-storey office, part of which will be the local base for Sydney investment house Pallas Capital.

Australian Unity’s former headquarters, which is being re-purposed to an aged care home, adjoins 71-73 Palmerston Cr to the south.

Two kilometres south of the city, near Kings Way and the Anzac train station – part of the $11 billion Metro Tunnel project – the office spreads an 818 square metre site. With 40 car parks it also includes 2711 sqm of net lettable area.

Colliers International’s Daniel Wolman would not comment on buyer, seller or price (story continues below).

Of the deal, however, he said it was transacted from due diligence to unconditional “in the heart of the COVID-pandemic”.

“Following an on-market campaign last year I ran an off-market process in early 2020 whereby the asset was locked in for due diligence and exchanged unconditional just before June 30,” the executive agent added.

“A freestanding building in a prime city fringe location with both 40 car parks and location, so close to the new ANZAC station, will always attract tenants and occupiers looking for flexible working in, and around the CBD”.

This sale follows several other recent transactions in the immediate precinct including 412 St Kilda Road for $108m, following another Colliers campaign, and the Royal Australian and New Zealand College of Obstetricians and Gynaecologists buying 1 Bowen Cr (c$19.6m).

Flight Centre banked $62.15m selling its headquarters at 436 St Kilda Rd, too.

A nine level office will be developed next door to 71-73 Palmerston Crescent, while behind it, Australian Unity is converting its former headquarters into an aged care home.

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Marc Pallisco

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

Marc Pallisco