The privately owned Beville Group is bringing its prized St Kilda Road office tower to the market to capitalise on pent-up demand due to a severe shortage of available investment grade property.
CBRE’s Kiran Pillai and Josh Rutman will steer the international Expressions of Interest process for 509 St Kilda Road - one of the boulevard’s most significant and desirable office buildings.
Comprising over 19,500sqm of net lettable area, the building is 100% leased to prominent tenants including the Australian Government, Fuji Xerox and global life insurer AIA insurance.
St Kilda Road has been one of Melbourne’s most actively sought-after investment markets in recent years, with significant interest from local and international investors driving values to new heights.
Groups such as Tong Eng, Mapletree, KKR and Rockworth have all acquired prominent office buildings in the past 18 months for yields as tight as 5%.
CBRE’s Kiran Pillai said the campaign came at a time where quality office investment opportunities in Melbourne were in very short supply.
“Office investment sales volumes are down significantly on previous years due to the shortage of stock,” Mr Pillai said.
“Melbourne’s fundamentals are so strong that owners of office assets have opted to leverage their existing holdings and seek out further investments rather than sell, which has restricted supply to almost half of what was offered in 2017.”
He noted that the strong fully leased tenancy profile, building quality and strong rent reversion story would help fuel private and institutional investor interest in 509 St Kilda Road as would the large site area of 6,000sqm.
“St Kilda Road has benefitted from record low vacancies in the Melbourne CBD, with absorption and effective rent growth figures for the precinct among the strongest in the country,” Mr Pillai added.
“Forecasts suggest this significant rental growth will continue and provide near term rent reversion upside for assets such as 509 St Kilda Road, which offer attractive staggered lease expiry profiles.”
Constructed by Lendlease in the 1990’s, 509 St Kilda Road occupies a rare Fawkner Park-fronted double site and is surrounded by some of the precinct’s most high profile residential and commercial towers.
CBRE State Director Josh Rutman said the existing office building was just one part of the equation, with the property’s land size and air rights providing a “genuine x-factor”.
“The building offers a rare combination of protected wrap-around views to Fawkner Park, the Melbourne CBD and water views across to Port Philip Bay and Albert Park Lake,” Mr Rutman said.
“It’s arguably an opportunity for the next cycle, but given the property’s prime location, outlook and strong holding income we’re expecting the campaign to generate strong interest from land bankers and developers who are comfortable warehousing properties with a view to creating something far more significant in the future.”
Mr Rutman added; “Investors may not choose to develop this property, but there is such versatility here and some distinct opportunities for adding value and driving the income profile of the asset.”
The international expressions of interest campaign will launch next week and close on Thursday 27th September 2018.
CBRE’s Kiran Pillai and Josh Rutman will steer the international Expressions of Interest process for 509 St Kilda Road - one of the boulevard’s most significant and desirable office buildings.
Comprising over 19,500sqm of net lettable area, the building is 100% leased to prominent tenants including the Australian Government, Fuji Xerox and global life insurer AIA insurance.
St Kilda Road has been one of Melbourne’s most actively sought-after investment markets in recent years, with significant interest from local and international investors driving values to new heights.
Groups such as Tong Eng, Mapletree, KKR and Rockworth have all acquired prominent office buildings in the past 18 months for yields as tight as 5%.
CBRE’s Kiran Pillai said the campaign came at a time where quality office investment opportunities in Melbourne were in very short supply.
“Office investment sales volumes are down significantly on previous years due to the shortage of stock,” Mr Pillai said.
“Melbourne’s fundamentals are so strong that owners of office assets have opted to leverage their existing holdings and seek out further investments rather than sell, which has restricted supply to almost half of what was offered in 2017.”
He noted that the strong fully leased tenancy profile, building quality and strong rent reversion story would help fuel private and institutional investor interest in 509 St Kilda Road as would the large site area of 6,000sqm.
“St Kilda Road has benefitted from record low vacancies in the Melbourne CBD, with absorption and effective rent growth figures for the precinct among the strongest in the country,” Mr Pillai added.
“Forecasts suggest this significant rental growth will continue and provide near term rent reversion upside for assets such as 509 St Kilda Road, which offer attractive staggered lease expiry profiles.”
Constructed by Lendlease in the 1990’s, 509 St Kilda Road occupies a rare Fawkner Park-fronted double site and is surrounded by some of the precinct’s most high profile residential and commercial towers.
CBRE State Director Josh Rutman said the existing office building was just one part of the equation, with the property’s land size and air rights providing a “genuine x-factor”.
“The building offers a rare combination of protected wrap-around views to Fawkner Park, the Melbourne CBD and water views across to Port Philip Bay and Albert Park Lake,” Mr Rutman said.
“It’s arguably an opportunity for the next cycle, but given the property’s prime location, outlook and strong holding income we’re expecting the campaign to generate strong interest from land bankers and developers who are comfortable warehousing properties with a view to creating something far more significant in the future.”
Mr Rutman added; “Investors may not choose to develop this property, but there is such versatility here and some distinct opportunities for adding value and driving the income profile of the asset.”
The international expressions of interest campaign will launch next week and close on Thursday 27th September 2018.
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.
