Melbourne’s commercial property market is stirring ahead of an expected end to the city’s strict lockdown, with an office tower held by Credit Suisse Asset Management hitting the market with expectations of $160 million or more.
The 11-level tower at 505 Little Collins sits on an island site. Its 18,000 square metres of office space is 91 per cent occupied. Credit Suisse’s asset management arm has formally put the property up for sale after recent approaches, including interest from a Hong Kong buyer.
“Astute buyers are looking past the current challenges and have great confidence in the Melbourne CBD market,” said JLL’s Leigh Melbourne.
“There is great depth of offshore and domestic buyers who have representatives and consultants in Melbourne that can facilitate an acquisition.”
Mr Melbourne and colleague Nick Rathgeber along with CBRE’s Kiran Pillai, Scott McGlone and Mark Coster have been been appointed to broker the tower deal.
Mr Pillai said the building’s position between Collins and Bourke streets in the heart of the financial precinct would be a drawcard.
The Little Collins Street offering follows the off-market sale to a Singaporean buyer of a Queen Street tower for $145 million in July.
That transaction was struck on an initial yield of 4.8 per cent, considered to be a relatively tight yield for a B-grade building in a market where leasing risk has increased in the wake of the virus crisis.
This month, Dexus sold a 22-level A-grade tower in the Melbourne CBD to German investor Deka Immobilien in a deal worth more than $450 million.
Interest is also increasing for a 25 per cent stake in 80 Collins Street, which Dexus owns with its wholesale property fund. In the near-$1.5 billion acquisition last year of the office and hotel development at the Paris end of Collins Street, Dexus’ balance sheet took on 75 per cent initially, with the intention of selling down a portion of that stake.
The movement in Melbourne comes as momentum is building in Sydney’s market, where as much as $6 billion in major towers could change hands in coming months.
Among the offerings in Sydney, Dexus has increased its sell-down of a stake in the $2 billion-plus Grosvenor Place from 25 per cent to 50 per cent. One of the building’s co-owners, Chinese Investment Corporation, is leading the charge for that exposure.
Fund manager Charter Hall is also testing the market, offering its landmark tower at 9 Castlereagh Street for sale for about $400 million.
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