Office Building

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While the anticipated trend might be a post-pandemic pivot away from office to residential projects, one Melbourne developer is sticking to their original intentions.

Developer DeGroup will embark on their new $70 million office tower in Melbourne’s CBD despite concerns over rising vacancy rates.

Founder Colin DeLutis said the group was more than confident that the new building would find a ready leasing market.

Located at 263 William Street, in the heart of Melbourne’s legal precinct, the project is set to rise 75 metres above the Metropolitan Hotel which will be retained with a suite of restoration works.

"With nothing new and modern having been built in the legal precinct for over 20 years, we are quite bullish about the market and very confident about the building’s leasing potential”, DeLutis said.

The company’s confidence diverges from commentary by property experts who have expected a lessening of demand for commercial developments in the Melbourne CBD.

“We’re going to see CBD office buildings converted into residential,” Kernel Property’s Steve Urwin said in July.

This has been supported by recent national office statistics for Q3, released by JLL.  

“The extended lockdown in Melbourne has negatively impacted the leasing market with the availability of backfill space and sublease space contributing to the uplift in vacancy”, said JLL’s head of leasing Tim O’Connor.

According to JLL’s insights, the Melbourne CBD recorded -70,100 sqm of net absorption over the quarter and vacancy increased to 11.3 per cent in 3Q20. 

The presumed push away from offices has yet to influence some Melbourne’s commercial developers who are confident that businesses and their clients want COVID safe, hygienic spaces.

The 20-storey, 7,013sqm building, offers 3,799sqm of office space over 17 levels and features an 822sqm multi-level restaurant and bar.

The self-contained office floors will feature kitchenettes, shower facilities, natural light from all sides and views of Flagstaff Gardens and the surrounding CBD.

Crema Constructions have been appointed as builders of the WMK Architecture designed building.

The tower is due for completion in 2022.
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While the anticipated trend might be a post-pandemic pivot away from office to residential projects, one Melbourne developer is sticking to their original intentions

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DeGroup to go ahead with $70m office tower in Melbourne CBD

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The Zagame family has acquired a recently rezoned Abbotsford land parcel of 4,735 square metres for $21 million.
Fitzroys agents Paul Burns and James Lockwood negotiated the sale of 112 Trenerry Crescent on behalf of the Australian Education Union (Victorian Branch) following an expressions of interest campaign.
The site has an existing four-level brick building with a net lettable area of 4,252 square metres, and fronts on to the Yarra River overlooking both Dights falls and Victoria Park, in addition to having views of the CBD skyline.
Burns said 15 offers were received from a mix of local and offshore bidders, predominantly made up of developers, with some partial owner occupiers.
“Bidders had schemes for a mix of office and residential uses for the property, looking to take advantage of the property’s recent rezoning to Mixed Use,” he said.
The AEU had previously used the building as their Victorian headquarters for many years, and held onto the property following their relocation until the rezoning was formalised.
Burns said the strong purchaser interest was driven by the property’s city fringe location and proximity to the burgeoning nearby office markets of Cremorne and Richmond.
The site had views to the Yarra River, Dight Falls, Victoria Park and the Melbourne CBD.
The existing building will be kept and re-used.
“Office vacancies across Melbourne’s city fringe have been tightening to historic lows and businesses are increasingly looking to Abbotsford as the next hotspot for commercial activity,” Burns said.
He said the property offers direct access to trains and buses, the Eastern Freeway and recently upgraded Hoddle Street, and a range of trendy lifestyle options and the scenery of the Yarra River, all within short walking distance.
Lockwood said developers are now looking beyond the busy Cremorne and Richmond markets for their next projects.
Cadence Property Group has lodged plans for a major office development on Victoria Crescent, near the Carlton and United Brewery, and Salta Property Group is undertaking a mixed-use project with office, apartment and build-to-rent components next to its Victoria Gardens shopping centre.
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Zagame family acquires Abbotsford office site from Australian Education Union

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Centuria Property Funds Limited (Centuria) has sold 19 Corporate Drive in Cannon Hill, an A-grade office building in Brisbane’s inner city, for $36.95 million following a campaign that generated strong buyer interest.
Sydney-based syndicator Aviator Capital was the successful buyer. It was Aviator’s third acquisition within the Brisbane market.
Completed in 2008, the two-level commercial building comprises 6,028 sqm of A-grade office accommodation strategically positioned six kilometres from the Brisbane CBD in the tightly-held Southgate Corporate Park.
“The property was originally purchased in December 2012 for $23.30 million and the Fund’s investment rationale since commencement was to provide investors with stable, high yielding and diversified income returns from a quality commercial office property situated in one of Brisbane’s most prominent growth corridors," Head of Real Estate and Funds Management, Jason Huljich said.
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“The gross sale price achieved was approximately $5.1 million or 17% in excess of the December 2018 valuation, which is an outstanding result for the Fund.
“In addition, the Fund has yielded an average income return to investors of approximately 10.3% p.a. over the six and a half years.
“This is an excellent result for all investors in the fund,” Huljich said.
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The sale was negotiated by Matt Barker, Justin Bond and Christian Sandstrom of Knight Frank, along with Anthony Ott and Peter Chapple of Savills.
 
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Centuria sells 19 Corporate Drive, Brisbane for $37 million

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Sentinel Property Group has splashed out $103 million on a Brisbane CBD office building - the largest acquisition in its history.
The unlisted real estate investment trust (REIT) bought the building on a net passing yield of 7.85%.
Makerston House at 30 Makerston Street, Brisbane is on an approximately 1,796 square metre site area with about 14,640 square metres of net lettable area over 14 levels.
It is located opposite the Queensland Police Service headquarters and 50 metres from the Brisbane Transit Centre.
The building has a 5 Star NABERS Energy rating and is 100% leased with a 4.63 year weighted average lease expiry (WALE).
The property is leased to the Queensland Government as well as various state government corporate entities.
The building is well positioned within the city, Sentinel Property Group Managing Director Warren Ebert said.
 “This is a fantastic acquisition for Sentinel and is our biggest purchase since the Group started 10 years ago,” Ebert said.
“Makerston House is a tremendous asset that is in the heart of a precinct accommodating the state’s critical legal infrastructure and services, including the Queensland Supreme Court and District Court and the Brisbane Magistrates Court.
“The building is opposite the Queensland Police Headquarters and just 50m from Roma Street Train Station, the only existing CBD railway station that will link to the high capacity Cross River Rail.”
Ebert said Sentinel was excited to make Makerston House the 10th addition to the Sentinel Regional Office Trust.
The Sentinel Regional Office Trust also comprises 11 Argyle St, Newcastle, The CasCom Centre at Casuarina in Darwin, 200 Creek St, Brisbane, 8 Buller St, Port Macquarie, Jacana House and Arnhemica House in Darwin, 139 Grafton St, Cairns, and Central Plaza and River Quays in the Townsville CBD.
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Sentinel secures Makerston House in Brisbane CBD for $103 million

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A commercial office building in the Liverpool CBD has hit the market with hopes of $50 millions plus.
The property at 211 Northumberland Street was originally purchased by the company as part of the Denison Portfolio.
ESR have appointed Colliers International's James Barber, Frank Oliveri and John McCann in conjunction with Ray White Commercial's Peter Vines and Victor Sheu to market the property.
The sale comes as ESR continue to realise the divestment of their non-core assets to focus on their growing industrial portfolio.
Sitting in the centre of Liverpool CBD, the 7,645sqm NLA building is fully leased to the NSW Government Department - Family and Community Services – until 2022.
ESR also sold a commercial building earlier this year in Campbelltown for over $19 million.
John McCann, National Director of Sydney Metro Sales, added that their recent $80 million sale of 1 Fitzwilliam Street in Parramatta represented a circa five per cent return.
“The purchase was via a first-time entrant into the market from off-shore. There's strong interest from off-shore buyers into Western Sydney given the government's decentralisation plans from the Sydney CBD and also the infrastructure spend,” he said.
“With Parramatta currently booming, investors are seeking the next hot spot and given its proximity to the new airport and billions of dollars being invested in infrastructure in the South West, Liverpool was a very good option,” said Ray White Commercial NSW - Western Sydney Managing Director Peter Vines.
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Liverpool CBD office building offered with $50 million plus hopes 

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Marine House, a historic Victorian style building in Fremantle, WA will be ready for a new tenant/tenants from July 2020. 
It is currently undergoing a refurbishment. 
The Department of Transport’s moved from the building at 1 Essex Street located 200m from Fisherman’s Wharf and adjacent to the Esplanade Hotel.
Marine House features 3,640 sqm of office space and abundant on-site parking.  
Knight Frank Partner and Joint Head of Office Leasing, Greg McAlpine, said Marine House was located in the Esplanade precinct of Fremantle and the site had been a key landmark and enduring legacy of the city’s history.
He said the five level building would be completely upgraded and refurbished over the next 12 months.
It would provide a corporate office environment. 
“The refurbishment will see a new a lobby, completely new entrance and façade and upgraded services such as lifts, air conditioning, lighting and security,” McAlpine said. 
“It will also see the creation of brand new End of Trip facilities including bike storage and lockers, showers and change-rooms.”  
Mr McAlpine said available spaces within the building were an 805-955sqm ground floor tenancy, first and second floors of 1039sqm and a third floor of 607sqm. 
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Fremantle landmark Marine House up for lease

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The mezzanine floor of Moran House, an owner occupied office building in the Sydney CBD owned by the Moran family, is now available for lease
The tenancy at <a href="http://ecomms.raywhite.com/collect/click.aspx?u=jRYOrR8N39QzG/Nyy8oj1MsQ8lDBqOLe5o804VtamUhEA/9ZQVMvzNGgema06ruScwh8KTG/dcOZySCVoUz6QcmdBxtFfWxAjdYwySfTz0uNjem/i2I2Q110NoIn83n0ThrNmqYH1OcLrnCcXIOa7w==&amp;rh=ff00528e887253a2c7f9676eed448bd60cdee792" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">13-15 Bridge Street</a> is being marketed for lease by Scot Robertson of Robertson and Sons and John Skufris of Ray White Commercial South Sydney.
Robertson said the recently renovated tenancy of about 166 square metres comprised reception, boardroom and an open-plan office area with exposed ceilings.
"This overlooks the Christopher Hanna hair salon situated on the ground floor via full height glazing looking through a spectacular feature mural screen sculpture by Douglas Annand to Bridge Street," Robertson said.
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The building formerly known as Liner House is classified by the National Trust, previously won the Sir John Sulman Medal for architectural excellence.
It is situated within close walking distance to both Wynyard and Circular Quay stations. 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/10/15/Mezzanine_13-15%20Bridge%20St%20Sydney-88.jpg" alt=""> The lift has recently been replaced and the mezzanine level has been refurbished. The asking rent for this property is $725 per square metre per annum gross plus GST, with the tenancy available for immediate occupation, and is ideal for up to 20 staff, Robertson said.
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Sydney CBD Moran House mezzanine floor for lease

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An office building, currently owner-occupied by Netball Victoria, has come onto the market. 
The two-level building a is located 150 metres from Melbourne’s historic Flagstaff Gardens.
It features a 10-car basement. 
Following 23 years of occupation, Netball Victoria is relocating to the State Netball &amp; Hockey Centre in Parkville, which is expected to be completed early-mid 2021. 
Savills have listed the property, being sold via an expressions of interest closing April 1.
An anticipated sale price of at least $4.75 million is expected.
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