Melbourne

Cremorne windfall as neighbours sell significant office development site

Neighbouring Melbourne landowners have made a close to $23 million windfall after selling their combined properties in Cremorne.

09 May 2018

Neighbouring Melbourne landowners have made a close to $23 million windfall after selling their combined properties in Cremorne.

The 116-124 Balmain Street landholding was recently offered for sale through the CBRE Victorian Development Sites Sales team of Julian White, David Minty and Chao Zhang.

The sale price for the 1,750sqm, Commercial 2-zoned landholding, translates to almost $13,000/sqm – representing a significant uplift from recent major sales in the Cremorne precinct.

A Sydney-based developer acquired the property, which could accommodate an up to eight-level office building subject to the relevant planning approvals.

CBRE’s Mr Minty said the strong sale result was made possible after two neighboring owners consolidated their properties to create the largest parcel of land to be publicly marketed in Cremorne for five years.

A range of well-known local and Asian developers competed for the site, which is situated in the Cremorne/Richmond area – a precinct that has emerged as one of Melbourne’s hottest inner city corporate locations.

“Developers such as Alfasi, Zig Inge, ICON, Caydon and Salta have been actively targeting the precinct as a result of strong tenant demand, with the area already home to Uber, MYOB, Walt Disney Company, REA Group, Tesla, and Carsales.com.au,” Mr Minty said, adding that Reece had also recently committed to a major new development project.

“The area has become particularly sought after by businesses in the creative industries, providing ease of access to the city, public transport and the freeway. Rents are now regularly exceeding $500/sqm and, in turn, vacancy rates are at historically low levels of just 1%.” 

As a result, Mr Minty said land prices had skyrocketed – from as low as $3,000/sqm in 2013 to the circa $13,000/sqm benchmark achieved for 116-124 Balmain Street.

“The growth and demand in this market has been phenomenal,” Mr Minty said.

“Furthermore, while the Balmain Street properties were improved, there were options on the leases, translating to a yield equivalent to 2.8%.”

The site is the latest to be sold through CBRE for office development, amid signs of continued strong tenant demand.

“At a time when the residential market is showing slower signs of growth, developers are capitalising on high levels of activity in the city fringe office leasing market,” CBRE’s Mr White said.

“Suburbs such as Cremorne, Collingwood, South Yarra and South Melbourne have been the principal focus points, with developers aspiring to provide modern office space that caters to evolving tenant needs. Many businesses do not feel the need to operate from the Melbourne CBD and want more modern accommodation and easier access than what is provided on St Kilda Road.  The resultant rise is land prices has been unprecedented”


 
 
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CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2017 revenue). The Company has more than 80,000 employees (excluding affiliates), and serves real estate owners, 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.au.

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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of 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 https://www.cbre.com.