It is the last of three neighbouring properties to be sold by CBRE on behalf of a trio of high-profile owners, taking the total sales tally to around $60 million.
The combined total represents a circa $20 million uplift on the price paid for the sites in 2015 by Probuild founder Phil Mehrten, developer Ozzie Kheir and developer Frank Palazzo.
The 383 Spencer Street asset was the smallest asset, comprising an 80% vacant, three-level office building.
It has been snapped up for close to $7 million by a private Melbourne-based investor. The deal follows the earlier sales of a vacant two-level warehouse at 102-108 Jeffcott Street and a seven-storey former warehouse building at 355 Spencer Street to separate investors and developers.
CBRE’s Josh Rutman said the deals highlighted that, despite the current climate, strong results were still being achieved for strategically positioned commercial assets.
“While some investors have more optimistic short-medium views than others, this latest sale and the competition from different buyer groups highlights that certainty is well and truly returning to the market,” Mr Rutman said.
Since the pandemic was announced in early March, Mr Rutman said his team has sold 23 commercial properties in Melbourne for a combined total of more than $220 million. About 60% of these transactions involved office buildings and 90% of the assets had significant levels of vacancy.
“This is a leading indicator of investor appetite for high risk assets, with groups deciding to take a long-term view on the leasing market and future tenant demand after the COVID-19 health crisis,“ Mr Rutman said.
The international expressions of interest campaign for the three assets formally closed during the peak of market uncertainty stemming from COVID-19.
The first property to trade was sold unconditionally, approximately one month after the World Health Organisation declared COVID-19 a global pandemic.
Mr Rutman said all three of the largely vacant properties had been acquired by highly experienced and sophisticated investors and developers with extensive knowledge of the Melbourne property market.
“102-108 Jeffcott Street was sold to a residential developer while 355 and 383 Spencer Street have each been acquired by investors looking to undertake major refurbishment and reletting programs, which speaks volumes for the precinct’s prospects,” Mr Minty said.
The diverse buyer profile for assets in the popular city fringe suburbs of West Melbourne and Cremorne was recently highlighted by the sale of 81 Green Street, Cremorne. That asset was sold off-market to David Kinson, who plans to develop the single level warehouse into a multi-level office.
Mr Minty said investors were showing an increased appetite for city fringe and suburban areas as businesses sought to decentralise and diversify their workplace operations.
“More organisations are looking to establish offices outside the CBD, allowing employees to work closer to home,” Mr Minty said.
“By situating their satellite office or main headquarters in key precincts such as West Melbourne, Hawthorn and further out in the south eastern pocket of Mulgrave, businesses can offer their employees excellent amenity, shorter travel times and better parking options.”
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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 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 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.