Tom Tuxworth, Nick Lower and Tim Last of CBRE’s Strata Projects team said Melbourne had bucked the usual trend of a ‘holiday lull’, with increased levels of buyer interest and a shortfall of supply underpinning strong sales activity over the Christmas period.
“On a daily basis, we are dealing with buyers who are eager to purchase. Finding them something is becoming more difficult due to the supply/demand imbalance,” Mr Lower said.
Earlier this month, a local architect acquired a 129sqm three level commercial property at 31 Guildford Lane for $3.007 million.
Mr Tuxworth said the sale reflected the increased demand for freehold office buildings located within the CBD’s tightly held legal precinct.
“The Guildford lane property has proven to be a competitive property due to its mixed use and un-refurbished condition,” Mr Tuxworth said.
“The property drew interest from a range of different buyers including offshore and local developers, offshore and local investors and offshore and local owner occupiers.”
In further evidence of strengthening market conditions, an offshore investor recently purchased a 238sqm café premises at 28 Little Bourke Street for $1.42 million, reflecting a yield of 4.2%.
Meanwhile, a local investor recently secured a foothold in Melbourne’s legal precinct with the purchase of a 403sqm office floor for $1.3 million.
Located on level five, 271 William Street, the property is currently leased to long term tenant Blackstone Legal Costing.
“The investment benefits of fully fitted leased floors within the city are driving the already competitive strata market,” Mr Tuxworth explained.
“In particular, properties such as this within the tightly held legal precinct are becoming a sought after commodity due to the lack of supply and increased demand.”
With the current high level of buyer enquiry, a number of Melbourne CBD strata office owners are looking to take advantage of this surge in interest.
Bruce Corrin, who owns level 3, 171 La Trobe Street, is set to test the market in the coming weeks.
“With the activity seen in 2014, I feel the time is right to sell,” Mr Corrin said.
Mr Tuxworth said the strength of demand was of no surprise, with more than 80 strata office transactions completed in 2014 and a record per square metre rate of $9,027.
For Australian/international news or global stories, follow us on Twitter.
