The Melbourne headquarters of Robert Christie’s national co-working business Christie Spaces has been acquired by a Macau-backed investor for $40.1 million.
The CBRE Melbourne Middle Markets team of Josh Rutman, Kiran Pillai, Mark Wizel and Lewis Tong negotiated the sale of the 454 Collins Street building following an international Expressions of Interest campaign that attracted 14 offers.
Peter Bazzani of BSP Lawyers represented the purchaser in the transaction.
Located on the corner of William Street, the 12-storey building last sold for $17.8 million at the height of the pre-GFC market in 2007.
In the latest campaign, the recently refurbished building was offered with a single tenant leaseback to Christie Spaces. The sale price reflects a fully leased yield of 4.24% and translates to a value of approximately $13,000/sqm of net lettable area.
Mr Rutman noted that the sale reflected the current strength in the CBD office sector, with the campaign generating aggressive bids from several Sydney and Melbourne groups in addition to investors from Singapore, Malaysia, Germany and Hong Kong.
“We are witnessing office capital values reach a new benchmark in Melbourne, with this transaction confirming a doubling of values versus those that were achieved for similar assets as recently as 2013,” Mr Rutman said.
“We received several unconditional bids at the close of the campaign, however the depth and diversity of bidding is the true barometer of current market conditions. We are seeing a number of new groups enter the office investment market as a means of diversifying property portfolios that have been predominantly weighted towards retail or industrial in past years.”
The sale follows two other Christie Corporate property disposals in Sydney and Brisbane.
Mr Rob Christie, head of Christie Corporate, noted; “We don’t part with our real estate lightly as we know how hard these properties are to find, but the offers brought forward during the campaign were simply too good to refuse. The Melbourne market has come a very long way in this current cycle.”
Mr Christie added; “Our business will still have a Melbourne home for many years to come, as we are very optimistic about white collar employment and tenant demand conditions.”
Lewis Tong, head of CBRE’s Asian Services Desk, attributed the interest in 454 Collins Street to the quality of the asset and noted that several Asian groups had made strong offers.
“Top quality real estate always unearths new aggressive capital that may have been dormant for several years,” Mr Tong said.
CBRE’s Mr Wizel added; “Whilst there is clearly some general nervousness in the marketplace both from investors and their financiers, it is clear that when quality properties are brought to the market, they continue to not only attract high levels of interest but, importantly, they also attract “fresh” Asian capital, which is assisting in driving pricing benchmarks to record breaking levels.”
Strong market fundamentals were a contributing factor, despite some nervousness about the pipeline of supply mooted for 2020, according to CBRE’s Mr Pillai.
“The Melbourne office market is showing some of the strongest fundamentals we have seen since 2007 and, despite some potential volatility forecast for this market over the medium term, investors are clearly confident in the long-term outlook for the sector,” Mr Pillai said.
The sale of 454 Collins Street coincides with the ongoing transformation of the West End of the Melbourne CBD, which is earmarked for major projects such as the Mandarin Oriental at 600 Collins Street.
Other significant developments in the precinct include Mirvac’s 477 Collins Street, which is pre-committed to Deloitte, and Cbus Property’s Collins Arch mixed-use development, which has already attracted King & Wood Mallesons, HWL Ebsworth and Gadens as pre-committed tenants, as well as the city’s first W Hotel.
“Over $3 billion in office, retail and residential development is either planned or underway in Melbourne’s mid-town. It’s a rapidly changing landscape and investors are looking to get a piece of the action before this market fully matures,” CBRE’s Mr Pillai said.
The CBRE Melbourne Middle Markets team of Josh Rutman, Kiran Pillai, Mark Wizel and Lewis Tong negotiated the sale of the 454 Collins Street building following an international Expressions of Interest campaign that attracted 14 offers.
Peter Bazzani of BSP Lawyers represented the purchaser in the transaction.
Located on the corner of William Street, the 12-storey building last sold for $17.8 million at the height of the pre-GFC market in 2007.
In the latest campaign, the recently refurbished building was offered with a single tenant leaseback to Christie Spaces. The sale price reflects a fully leased yield of 4.24% and translates to a value of approximately $13,000/sqm of net lettable area.
Mr Rutman noted that the sale reflected the current strength in the CBD office sector, with the campaign generating aggressive bids from several Sydney and Melbourne groups in addition to investors from Singapore, Malaysia, Germany and Hong Kong.
“We are witnessing office capital values reach a new benchmark in Melbourne, with this transaction confirming a doubling of values versus those that were achieved for similar assets as recently as 2013,” Mr Rutman said.
“We received several unconditional bids at the close of the campaign, however the depth and diversity of bidding is the true barometer of current market conditions. We are seeing a number of new groups enter the office investment market as a means of diversifying property portfolios that have been predominantly weighted towards retail or industrial in past years.”
The sale follows two other Christie Corporate property disposals in Sydney and Brisbane.
Mr Rob Christie, head of Christie Corporate, noted; “We don’t part with our real estate lightly as we know how hard these properties are to find, but the offers brought forward during the campaign were simply too good to refuse. The Melbourne market has come a very long way in this current cycle.”
Mr Christie added; “Our business will still have a Melbourne home for many years to come, as we are very optimistic about white collar employment and tenant demand conditions.”
Lewis Tong, head of CBRE’s Asian Services Desk, attributed the interest in 454 Collins Street to the quality of the asset and noted that several Asian groups had made strong offers.
“Top quality real estate always unearths new aggressive capital that may have been dormant for several years,” Mr Tong said.
CBRE’s Mr Wizel added; “Whilst there is clearly some general nervousness in the marketplace both from investors and their financiers, it is clear that when quality properties are brought to the market, they continue to not only attract high levels of interest but, importantly, they also attract “fresh” Asian capital, which is assisting in driving pricing benchmarks to record breaking levels.”
Strong market fundamentals were a contributing factor, despite some nervousness about the pipeline of supply mooted for 2020, according to CBRE’s Mr Pillai.
“The Melbourne office market is showing some of the strongest fundamentals we have seen since 2007 and, despite some potential volatility forecast for this market over the medium term, investors are clearly confident in the long-term outlook for the sector,” Mr Pillai said.
The sale of 454 Collins Street coincides with the ongoing transformation of the West End of the Melbourne CBD, which is earmarked for major projects such as the Mandarin Oriental at 600 Collins Street.
Other significant developments in the precinct include Mirvac’s 477 Collins Street, which is pre-committed to Deloitte, and Cbus Property’s Collins Arch mixed-use development, which has already attracted King & Wood Mallesons, HWL Ebsworth and Gadens as pre-committed tenants, as well as the city’s first W Hotel.
“Over $3 billion in office, retail and residential development is either planned or underway in Melbourne’s mid-town. It’s a rapidly changing landscape and investors are looking to get a piece of the action before this market fully matures,” CBRE’s Mr Pillai said.
For Australian/international news or global stories, follow us on Twitter: @cbreaustralia
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2017 revenue). The company has more than 80,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2017 revenue). The company has more than 80,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
