Castlerock to build $49m state government suburban office building
Melbourne-based fund manager Castlerock Property has won the tender to build a $49 million office building for the Victorian government in Frankston at the entrance to the Mornington Peninsula.
Castlerock, which has about $700 million of assets under management – the majority being state and Commonwealth government-leased facilities – expects to begin construction of the approximately 5500 sq m facility in the first quarter of 2023 and complete it by mid-2024.
The new building will be developed on the site of the Frankston International Motel at 383 Nepean Highway. It will accommodate more than 450 employees from the Victorian government under a long-term lease agreement.
Castlerock, founded by Hank Bronts, paid $12.5 million in 2020 for the 4640 sq m site in the justice precinct close to the Frankston CBD.
The office building will be developed within Castlerock’s existing Auslink Property Trust No.2, (APT2) which holds 13 properties worth about $525 million.
Frankston, a coastal suburb 41 km south-east of the Melbourne CBD, is the focus of investment by the state government that includes the $1.1 billion redevelopment of the Frankston Hospital, which kicked off last month and is due to be completed in 2025.
Near the new government offices site, Melbourne developer Pace has submitted plans to build a $150 million apartment tower on the old cinema site at 438-444 Nepean Highway.
Castlerock’s managing director, Adam Bronts, told The Australian Financial Review the fund manager had already secured precommitments from its pool of wealthy and mum-and-dad investors for the Frankston development following a soft, off-market capital raise in August.
“Currently investors in the APT2 fund are getting a 6.7 per cent return after costs. That’s pretty attractive,” Mr Bronts said.
“We have a big backlog of investors wanting to get in.”
Mr Bronts promised to deliver the greenest building in the Frankston CBD with a minimum 5 Star NABERS energy and water rating.
Amenities will include “CBD quality” end-of-trip facilities, including 50 bicycle spaces, e-scooter parking and charging facilities, locker rooms and showers.
The building’s design featuring two wings that spread out from the main entrance and an atrium takes its inspiration from the local wildlife – the Eastern Great Egret.
Castlerock’s successful tender for the Frankston project follows it raising $90 million last year to help fund the purchase of an office building in Ipswich, about 40 kilometres west of Brisbane.
In 2020, Castlerock paid more than $57 million for a five-storey office building in Wollongong’s CBD that houses the Australian Taxation Office, a record for the regional city.
