University buys another building from landlord
EXCLUSIVE
The University of Melbourne has used the commercial real estate downturn to buy another inner-city building from a landlord.
The college will save annual rent – currently $913,966 gross ex-GST – when it settles on 550 Swanston Street, Carlton.
Applying a yield of 5.5 per cent, the value is c$16.6 million.
A 6.5pc return would lower that to $14m.
At the peak of the last property cycle, with more investors active, a university-backed asset with development upside like this could have traded on a 4-4.5pc yield or less – between $20m-$23m or more.
The deal comes seven months after realestatesource.com.au reported the university bought another Carlton building from a landlord – the former Myer Dispatch Centre at 45 Barry Street, also exposed to Berkeley Street, for $34.1m.
That seller was the Chiodo family,
Lloyd Williams was a former owner.
The university is also planning a major overhaul of its Grattan Street frontage.
That proposal would raze the John Medley Building and several mid-century faculty buildings – the land becoming a landscaped open space stretching towards University Square.
The most significant is the John Medley Building, penned by Roy Grounds, completed in 1971 and not heritage-listed.
The pocket is expected to become busier following the recent opening of the Parkville station at the corner of Grattan St and Royal Parade, part of the c$14 billion Metro Tunnel project, which opened in July.
Melbourne Central station is about 750m away (continues below).
13-level development upside
On 1315 square metres also exposed to Gibbons Place, off Cardigan St, 550 Swanston St houses the School of Health Sciences and Melbourne Hearing Care Clinic.
There is 1840 sqm over three levels and 30 car parks.
A tower up to 13 levels could be considered for the Mixed-Use zoned block, according to the marketing agents, Savills’ Tim Grant, Tom O’Halloran and Linc Reynolds.
The profile to Elizabeth St can rise 20.5 metres, they added.
Development outcomes could include student Accommodation, Build-To-Rent, Build-to-Sell, a hotel or office, they said.
Business as usual at secured site
The university medical practice, formerly the University of Melbourne Clinic, provides clinical training for Master of Audiology students while offering hearing services to the public.
“Purchasing the property allows the university to end its leasing arrangements and ensure the clinic can continue to operate from its current location, avoiding the significant cost and disruption of potential relocation,” a spokesperson said.
“The clinic has provided excellence in clinical education for the next generation of audiologists at its current location for more than thirty years…the university remains committed to supporting this valuable service, both as a critical teaching site and for our students as a resource for the community,” they added.
More to come.
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