Sydney-based fund manager Pallas Capital and its development offshoot Fortis have snapped up more than $100 million in Melbourne and Sydney city-fringe commercial properties during the pandemic.
Fortis director Charles Mellick said the properties would have an end value of around $400 million after redevelopment. “We still see people moving out of the CBD,” he said.
The latest acquisition was the Appel family’s South Melbourne office building at 18-22 Thomson Street which transacted for $6.9 million.
The three-level 1970s-era office building sits on a 496 square metre site, one block back from Albert Park Lake. The property is not far from Pallas’ new headquarters on Palmerston Crescent and neighbours include Tim Gurner’s 10-level 74 Eastern apartment project.
Mr Mellick said it would be redeveloped into a $27.5 million office.
“Premium office space in South Melbourne is in great demand. We’ve already leased out 60 percent of Pallas House through off-market deals over the past four months.
The deal was negotiated by Appel Property’s Ben Appel and Tomassi & Co’s Alby Tomassi.
Mr Appel said his family’s time as property developers had come to an end and the building had reached the “functional obsolescence” stage.
The move comes as Pallas’ property development arm Fortis received approval to go ahead with its three-story luxury apartment project in Brighton.
Fortis settled on the development site at 10-12 Male Street and 41A Black Street in February, paying $14.25 million.
Construction is expected to start next month. Mr Mellick said the 16-unit project would be similar to its developments in Sydney’s Rose Bay which had sold quickly during the pandemic.
A large project in Clifton Hill dubbed The Foundry, is still in planning with Yarra City Council.
Serco’s new call centre at Essendon Fields mops up the 6296 sq m space left over from the Good Guys at Lindsay Fox’s and Max Beck’s office park.
Serco is backfilling the 2.8 years left on the lease at 15 Vaughan Street, paying $2.3 million a year.
The Australian arm of the British outsourcing services company is running call centre operations for the Federal Government’s Australian Tax Office, Centrelink, Medicare and other government agencies, including managing the JobKeeper program.
The Good Guys merger with JB Hi-Fi in 2016 resulted in the two companies giving up their suburban offices at Essendon and Chadstone Shopping Centre and meeting in the middle – the IBM building at Southgate.
JLL agents Tim Sugar and Josh Tebb did the deal with Charter Keck Cramer acting for the Good Guys.
In another sign of the times, the old news and Tatts agency at 511-513 Riversdale Road, Camberwell, has been given a new lease on life as a gym.
The 400 sq m shop has been leased by AX-listed Viva Leisure’s Hiit Republic for 10 years in a deal struck by CBRE agents Jason Orenbuch and Zelman Ainsworth.
The shops at the Junction, including the Curry House next door, sold last year for $4.65 million to a locally-based Malaysian investor. The vendor was Zagame Holdings.
Other new leases inked under lockdown include new furniture retailer Gatsby Living, which has taken space in the Northland Homemaker Centre.
The deal was negotiated by Leedwell Property’s Chris Parry, with Tom Perkins and Nick Segran, who said there was interest from a number of retailers for the space.
“We transacted an off market deal in a matter of weeks during stage four restrictions,” Mr Parry said.
“A number of large format retailers have had strong sales results and this has been underpinning activity,” he said.
Gatsby Living has taken a seven year lease on the 1120 sq m showroom – unit 15 at 19-33 Murray Road. Market rents are around $285-325 a sq m.
Let’s hope our future has more substance than the fragile glittery world of bootlegger Jay Gatsby, for whom F. Scott Fitzgerald’s The Great Gatsby was named.
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