GPT told the paper “We have not announced the sale yet”.

Elsewhere in the immediate area, a medium density apartment complex has been developed in front of the Strathmore train station entrance, while units are increasingly replacing houses on Pascoe Vale Road.

CB Richard Ellis’ agents Chris Parry, Gab Pascuzzi and Andrew Stewart marketed the Essendon property with Colliers International’s Jeremy Gruzewski.

The remainder of the site will be divided into eight further bulky good showrooms of between 1000 square metres and 2600 square metres. It will also include car parking for 660 cars.

Baron Corporation director Stewart Baron said redevelopment of the former textile manufacturer will start next week, and be complete by the middle of next year.

The property at 64 – 96 Gaffney Street is widely recognised as the former home of furniture retailer Gainsville.

Late last year Gainsville, known for its TV adverts featuring scantily clad women posing with the product range – relocated to a smaller premises in Thomastown. It occupies around 3700 square metres for a combination showroom/warehouse, encompassing nearly one third of a new homemaker retail development on Settlement Road.

It is the latest in a string of private investor sales of around $10 million – which includes the former Surf Dive n’ Ski store in Bourke Street which sold for $9.3 million against a reserve of $7 million, and a retail arcade on Swanston Street which sold for $13.05 million against a reserve of $8 million.

Both sold to individual private investors who had easy access to the funds.

“There’s been a marked increase in the number of private investors seeking assets of more than $10 million this year,” said Fitzroys director Peter Weatherby, who was marketing the Volkswagen property

Wealth effects generated from the recent residential property surge, coupled with strong sharemarket returns is driving private investor demand, which was until recently considered confined to the sub $5 million category, he said.

Knight Frank director Michael Hede says interstate investor demand, particularly from the resources-rich states of Queensland and Western Australia, is one of the biggest trends to develop this year.

“In terms of capital growth, Melbourne’s commercial property sector still has a bit of catching up to do in comparison to Brisbane and Perth, and buyers from interstate can see there’s plenty of upside,” says Mr Hede. “Nationally, there are hundreds of private investors around Australia looking at real estate assets of around $10 million.”

“Not only are they seeking securely leased properties, they are also willing to take on redevelopment and refurbishment of buildings prior to leasing.”

CB Richard Ellis senior manager retail investment, Mark Wizel agrees, adding the recent sale of retail assets at Freshwater Place in Southgate and the Chevron project in Prahran also aroused international interest, particularly from China and Vietnam.

Mr Wizel said rising interest rates, designed to slow the pace at which the economy moves, has done little to dampen interest. “Most private investors factor interest rate rises in their purchase price.”

The property returns just over $773,450 per annum in rent.

TBM Commercial agent George Kiper, who negotiated the sale for a private investor, confirmed the property had sold, but declined to elaborate on any part of the deal when contacted by Capital Gain. However local selling agents say they expected the property to sell on a yield of between 7 and 7.5 per cent, which would equate to a price of between $10.3 million and $11.1 million.

Given its location at a prominent freeway onramp and exit, and on the cusp of Port Melbourne’s high-tech industrial precinct, the property has redevelopment potential. However, sources say, future plans would need to factor in chaotic local traffic conditions, which force exiting Western Gateway Centre visitors southbound into Spotswood, where they need to do a U-turn to travel north.

“It’s not regarded as the easiest complex to get in and out of,” said one undisclosed local agent.

Fellow retail heavyweight Harvey Norman owns the 8-hectare property at 917 Princes Highway, which was formerly used as a Telstra supply branch. It fought off fierce competition from developers paying what was, in 2004, considered a bullish price of $14.6 million for the property – $4.6 million more than vendor Folkestone paid for it six months earlier.

Harvey Norman plans to develop the property in stages, starting with a 37,000 square metre homemaker centre for approximately 16 big box retailers.

Last week however, it lodged a second application with the Greater Geelong City Council for a further 32,000 square metre facility. With only a handful of retail tenants requiring such quantities of space, the spotlight suddenly shone on Ikea.

An Ikea spokeswoman told Capital Gain the company is planning to open a new showroom in the south-eastern suburbs, but said nothing formal has been signed yet.

A spokesman for Harvey Norman declined to comment.

Local agents say the Harvey Norman owned centre, at one end a proposed arterial road that would connect the Monash Freeway to the Princes Highway, will eventually become one of the highest profile sites in the south-east. Despite its Springvale address, the site is on the cusp of Mulgrave, Clayton and Clayton South – opening it to an established retail catchment as well as new estates in the outer south-eastern suburbs.