The properties about to test Collingwood’s cool credentials

Expected prices 55 years later are between $4.25-$4.5 million for Easey Street, a 960 sq m double-storey red brick warehouse; and $2.25-$2.5 million for the 550 sq m two-level office showroom on Sackville Street.

The two properties are on a combined footprint of 855 sq m.

Gorman Commercial’s Jonathon McCormack and Tom Maule are handling expressions of interest on a “buy one or buy both” basis.

The properties were part of the estate of the late Sam and Nina Narodowski – who migrated to Australia in 1950 as refugees – which funds RMIT scholarships for students from refugee or immigrant backgrounds who are suffering hardship.

Tower discounts

A CBD office tower is back on the market at a 12.7 per cent discount on its $200.5 million pre-pandemic purchase price. Encouraged by fresh investor enthusiasm for cheaper CBD towers, US fund manager AEW Capital is offloading 31 Queen Street, with hopes of $175 million.

The US fund bought the 22-storey building from Challenger at a serious premium in 2019. Challenger, which paid $81 million in 2011, held the tower on its books at $165 million.

At the time of AEW’s off-market purchase, the 19,213 sq m building was raking in $10 million a year in rent giving the deal a tight 4.9 per cent yield.

While not giving much away, AEW says it has achieved a 52.8 per cent increase in rental income in the six years it has owned the tower. It’s understood that’s on a fully leased basis, and the tower’s occupation rate is currently about 83 per cent with new tenants still taking up space.

CBRE’s Kiran Pillai, Scott McGlone and Nikola Jackson with Cushman & Wakefield’s Leigh Melbourne, Nick Rathgeber, Josh Cullen and Morgan Briscoe have charge of the listing.

“Thirty-one Queen Street has been a dominant performer in the leasing market over the past three to four years, underpinned by one of the best examples of a ground-up refurbishment,” Pillai said.

“Given the asset’s exceptional fundamentals, central-CBD location and low-risk cashflow, we expect strong interest from high-net-worth privates, syndicators and funds,” Melbourne said.

The decline in CBD values appears to have bottomed out with a series of big-game bargain hunters, ranging from cashed-up locals to offshore behemoths lured back to the market.

Hong Kong private equity property company PAG is understood to be running the ruler over Dexus’ Flinders Gate complex. Its current book value stands at $265.5 million with Dexus is reportedly hoping for around $260 million.

Last year PAG snagged 367 Collins Street for $340 million from Mirvac, a 20 per cent discount to its peak value.

The move also comes as Singapore-listed Frasers Logistics & Commercial Trust revealed it had sold 357 Collins Street to Harry Stamoulis for $195.3 million.

The final price – about current book value – will clock in at $192 million, after lease incentive liabilities are paid out. Frasers paid a staggering $222.5 million 10 years ago.

Heavy lifting on High

Developers are expected to swoop on a huge building on Armadale’s swanky High Street. The building which houses Armadale’s Goodlife Gym at 1216-1230 High Street, comes with a price guide of $25-$30 million.

The property is on a 1926 sq m parcel of land stretching back to Willis Street at the rear. Records show the Tauber family paid $1.62 million for the property in 1986. The gym includes a pool.

Packed to the eyeballs with frock shops, bridal boutiques, cafes and homewares, High Street has a vacancy rate of just 2.3 per cent, according to Fitzroys’ retail vacancy report, Walk the Strip, with rents commanding as much as $2000 a square metre.

Last year, the auction of 1047-1051 High Street dragged on for two hours with 900 bids volleyed between two parties. The corner double-storey office and shop, on 500 sq m of land, eventually sold for $11.4 million.

The Goodlife building is for sale through Cushman & Wakefield’s Daniel Wolman, Oliver Hay, Hamish Burgess and Leon Ma with Teska Carson’s Matthew Feld.

There’s a bit of choice on the strip at the moment. Lawyer and investor Peter Mitrakas is selling a 1585 sq m parcel of land at 23-27 Osment Street near Armadale Station for about $20 million.

And five strata owners at 1097-1111 High Street are hoping to sell their building – on a large 1733 sq m site on the corner of Huntingtower Road – for about $30 million.

East Melbourne

A local private investor has paid about $13.5 million for the old Melbourne IVF fertility clinic at 344 Victoria Parade, a much-storied building in East Melbourne’s medical precinct which won awards when it was built in the early 1990s.

While the vendor, veteran investment group Henkell Brothers, was seeking closer to $15 million for the three storey-office, it nonetheless made a tidy profit.

Henkell Brothers bought the 2444 sq m building from the late Richard Pratt’s Pratt Industries in 1995 for just $3.92 million – after it passed in at a mortgagee auction for $2.9 million.

It was a bargain even at the time. The Victorian Public Service Association had been ready to pay $7.12 million for the city-fringe office, but the deal fell through after the sale of its CBD office to theatre impresario David Marriner collapsed.

CBRE agents Nick Peden, Sandro Peluso, Jamus Campbell and Mark Granter negotiated the deal.

“The campaign attracted significant interest, with several unconditional offers received from both local and international investors – an unprecedented result for a vacant property,” Peden said.

The building had been the home of Melbourne IVF’s fertility clinic for many years but the baby-maker is off to Hines’ new 15-storey timber building, T3 at 36 Wellington Street, across the road.

AirHub

Growthpoint Properties is testing the market’s appetite for industrial investments offering up a six-property portfolio at Melbourne Airport.

The AirHub portfolio, currently on Growthpoint’s books with a $127 million value, covers a 25-hectare chunk of land around the airport with net lettable space of 139,707 sq m.

They’re being offered individually or as a job lot. Tenants include Australia Post, Unipart Group, Direct Couriers and Laminex.