Harbour Group has sold an office building in Melbourne’s suburbs to an unnamed local investor for $13 million at a 6.1% yield, marking one of the first metropolitan office sales of the year.
The two-level office is located at 16 Lakeside Drive in the Tally Ho Business Park in Burwood East, some 18km east of the Melbourne CBD.
The 2,313 sqm property sits on a 4,867 sqm commercial 1 zoned site, with the sale price reflecting a capital value rate of $5,620 per sqm.
It is fully let to the Country Fire Authority (CFA), Everkeen Group and Cora Group at a net passing income of $798,998 per annum, providing a weighted average lease expiry (WALE) of 2.3 years.
The deal follows ISPT’s acquisition of the nearby office building at 8 Lakeside Drive from Singapore-based TE Capital Partners for $35.8 million last November.
Also located in the Tally Ho Business Park, the CFA headquarters offered 4,502 sqm of net lettable area and represented a yield of just under 4.5% on the fully leased net income.
The 16 Lakeside Drive deal was negotiated by Colliers’ Peter Bremner, Rachael Clohesy and Leon Ma, in conjunction with Raoul Salter of Gross Waddell ICR.
Ma said the purchaser had property interests in the surrounding area and was looking at the Tally Ho asset as a landbanking opportunity.
“It is difficult to find fully leased investments in the $10-$15 million price range so we were not surprised that the campaign generated significant interest from a wide range of investors,” Bremner said.
Salter said buyers were showing great faith in the metropolitan office market, and it was evident during the course of the campaign that they were overwhelmingly confident that occupiers were looking to grow within popular business park locations.
Recent Melbourne office deals include Singapore-listed Straits Trading Company buying two office buildings in Docklands for $150 million this week, betting on the city’s post-COVID recovery.
Hong Kong-listed Link REIT entered into a $596 million deal with Oxford Properties to invest in an office portfolio including the 567 Collins Street building in Melbourne last week.
Rathdrum Properties bought the eight-level office building at 570 St Kilda Road from Terraplex for $67.6 million last week, while Irongate Group acquired a stake in a grade-A office building in Cremorne for $130 million last December.
Australia’s office investment market recorded $21.9 billion in transactions in 2021, up 60% on the previous year, according to Real Capital Analytics.
Interested in the office market? Take a look back at Australia’s biggest single office sales in 2021.