A high-profile suburban office building on Doncaster Hill has sold for over $15,000,000 following an off-market campaign.
An undisclosed buyer acquired the 651 Doncaster Road building, which has been controlled by the same private family for close to three decades.
Gorman Kelly’s Aldo Galante, Nick Breheny and Daniel Di Gregorio steered the highly competitive campaign in conjunction with CBRE Melbourne Middle Markets agents Scott Orchard, Josh Rutman and Lewis Tong.
Doncaster Hill is a high density residential and principal activity center anchored by Westfield Doncaster, which directly adjoins 651 Doncaster Road.
Gorman Kelly’s Mr Galante noted that that the number of office buildings in the area has dwindled considerably in recent years, following the conversion of older offices to residential projects.
“The limited supply of office accommodation in the area coupled with healthy rental growth in Melbourne’s inner eastern suburbs over the past 12-18 months underpinned strong buyer interest in the Doncaster Road campaign,” Mr Galante said.
The transaction follows heightened sales activity in Melbourne’s suburban office market in the second half of 2019.
To put this in perspective, CBRE’s Mr Orchard said circa $600,000,000 in city fringe/metropolitan office property was expected to trade in H2, versus approximately $160,000,000 in H1.
“The sale of 651 Doncaster Road reflects a building rate of around $7,000/sqm, despite a significant vacancy occurring pre-settlement due to an outgoing tenant,” Mr Orchard said.
“This emphasises the confidence buyers have in Melbourne’s metropolitan office market, particularly assets which have a high underlying land value and those which can be repositioned to better accommodate tenants given emerging trends for modern day offices’ needs,” Mr Orchard said.
Domestic and international buyers were targeted during the campaign, which CBRE’s Mr Rutman said had resulted in pricing levels more commonly seen in the city fringe market.
“We expect office investors to have a greater focus on Melbourne’s metropolitan markets in 2020 given the limited supply and intense competition for assets in the CBD, St Kilda Road and city fringe markets,” Mr Rutman said.
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