Year 2019 proving a record for Victorian office deals: CBRE

Some $2.6 billion worth of Victorian office investments have traded in 2019 – the highest ever recorded for the start of a year.

A total of $8.5 billion in office property worth more than $5 million changed hands nationally, according to the agency’s Q2 Office MarketView research report.

This was an increase of 21 per cent on the previous year.

The average office yield has compressed to 5.2 per cent for prime stock, CBRE’s head of research for Capital Markets, Ben Martin-Henry, added.

The agent said that the Reserve Bank of Australia’s announcement of two rate cuts, each of 25 basis points, since the federal election “meant that investors were now capitalising on rates of sub 3 per cent” which he expects will further compress property yields.


31 Queen Street, Melbourne, sold for $200 million.

The $2.6 billion worth of offices sold in Victoria this year is a slight increase on H1, 2018, CBRE said.

Major acquisitions registered this year include Charter Hall paying KWAP $192 million for 737 Bourke Street (pictured, top), and Boston’s AEW paying Challenger $200 million for 31 Queen Street in the CBD (pictured, right).

Dexus also confirmed earlier this year that it would spend close to $1.5 billion on a collection of properties known as 80 Collins Street.

“While the value of Melbourne CBD transactions in H1, 2019, was high, there is still a significant volume of domestic and offshore capital with an increasing urgency to be deployed,” CBRE senior director, Capital Markets, Neva Courts, said. “Genuine buyers need to be aggressively pricing rent growth to unlock acquisition opportunities”.

CBRE added that activity was slower in the sub $100m CBD market volumes due to limited availability “with only two offerings in the $50-$100m price bracket, versus six during H1, 2018”.

CBRE Middle Markets Director Josh Rutman said the shortage of opportunities “is leading to aggressive competition from private investors and smaller unlisted funds when sub $100 million assets are listed for sale, which is resulting in a significant capital value uplift for owners.”

Outside the CBD, sales activity dropped during the first half, ahead of a flurry of activity post the Federal election, Mr Rutman said.

Private and high net worth investors remained active however, with a large proportion of buyers originating from Malaysia, Singapore, Hong Kong, Macau and mainland China, he noted.

“The metropolitan office market risk premium vs the Melbourne CBD has narrowed as investors become increasingly comfortable with non-CBD investments, given the strength of tenant demand, effective rental growth and strong absorption figures in key suburban markets such as St Kilda Road, Richmond, Hawthorn and South Melbourne,” Mr Rutman said. 

Read CBRE’s Q2 Office MarketView report by following this link.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of