Demand for Melbourne strata offices strengthens

Melbourne, 26 November 2014 – Strong owner occupier and investor demand for strata offices across Melbourne has underpinned a flurry of sales this month, with close to $9million in property transacting in just one week.

CBRE’s Tom Tuxworth said investment appetite for quality office space in the CBD and Docklands office precincts had increased over the past months – a trend driven by the low cost and accessibility to debt and the continued Asian investment into Melbourne, particularly in the CBD. 

Earlier this month, an offshore investor acquired a 543sqm strata office at 112 Newquay Promenade in Docklands for $3 million – representing a passing yield of 7.2%.

Mr Tuxworth, who negotiated the deal in conjunction with fellow agents Nick Lower and Tim Last on behalf of DKO Architects, said the sale represented an outstanding opportunity to invest in the bourgeoning strata office market.

“Securely leased to DKO Architecture, this property offered an attractive opportunity to acquire a quality strata office asset in one of Melbourne’s prime business districts,” Mr Tuxworth said.

In further evidence of strengthening demand for strata office assets, a local owner occupier recently purchased an un-refurbished whole floor office from Richard Gu of the AXF Group for $3.74 million.

Located on the eleventh floor of 140 Bourke Street in the CBD, the 620sqm property sold for a rate of $6,032 per square metre.

Mr Tuxworth negotiated the sale in conjunction with fellow CBRE agents Ed Wright and Nick Lower.

He commented:  “This sale reflects strong interest from local owner occupiers, as well as offshore developers looking to gain a presence in the Melbourne CBD.

“The eventual buyer was the next door neighbour, who is planning on fully refurbishing the top floor office and relocate his business.” 

A Melbourne CBD lawyer recently acquired a 288sqm office on level eight of 256 Queen Street in Melbourne’s CBD legal precinct for $1.6 million.

“This sale was driven by a supply/demand imbalance for strata office space within this precinct,” Mr Tuxworth said.

“This sale reflects a new record price for the building, overtaking the previous record set by CBRE in January 2014 by $150,000 – an 11% uplift – further demonstrating the increased demand for fully leased and vacant whole floor offices in the Melbourne CBD.”