Pace's 10-level office at 51 Langridge Street in Collingwood. Photo: CBRE

Pace sells Collingwood office for $31m

Simon Johanson|Dec 04, 2019

Pace Development Group has sold an under-construction office in Collingwood for $31 million as the former industrial suburb’s city-fringe office market plays catch up to nearby Cremorne.

The 10-level office with a rooftop terrace is being squeezed onto a 510-square-metre block at 51 Langridge Street in the heart of a booming Collingwood development zone that reflects the rise of the former working class suburb as a bona fide office location and hip residential address.

Across the road from Pace’s tower, Cbus is building its 14-level Holme tower with 154 apartments and a short distance away Grocon is constructing the 13-storey Northumberland office development in a $120-million fund-through deal with the Liberman family-backed Impact Investment Group.

Pace’s 3000-square-metre office sold with just half the available space locked into leases at a building rate around $10,250 per square metre: a rate comparable to a recent fund-through deal achieved for an under construction office in Cremorne, in Melbourne’s inner east.

That deal saw CostaFox, a partnership between developer Michael Fox and vegetable king Robert Costa, sell a seven-level, glass-curtain-wall building just off Church Street at 1-11 Gordon Street in Cremorne for $50 million, at a rate above $10,000 per square metre.

Pace managing director Shane Wilkinson said the level of leasing inquiry and interest in purchasing the property during the construction phase was “testament to the strength of the precinct”.

The building has a fully leased net passing income of $1.6 million and sold with a rental guarantee through CBRE’s Scott Orchard, Josh Rutman, Lewis Tong and Joseph Du Rieu.

The tower was purchased by a businessman in his seventies who, having recently sold his company, wanted an investment with minimal maintenance and attractive depreciation benefits.

It was “close to where he grew up in the heart of Collingwood”, Mr Orchard said.

Tenants signed up to the building include Inspire Group, Melburnian Medical, Campaign Agent and Ground Crew in the cafe.

“When half of the vacant office assets are selling for over $10,250 per square metre, it is an interesting indication of where we are at in the investment cycle,” Mr Rutman said.

The next Collingwood office development is likely to be a $200 million project constructed out of prefabricated timber that American real estate giant Hines is planning for a corner site at 36-52 Wellington Street that it purchased in April for $28.5 million.