Tenants see new chapters in older buildings

“We’re seeing tenants wanting to commit to longer-term leases after assessing their requirements during COVID and smaller offices are conducive to a smaller capital outlay at a time when not all staff are expected to be in the office at all times,” he said.

Suburban office

Meanwhile, a suburban office project in Bundoora, left on the market after it was completed last year, has nearly sold out in eight weeks.

Built by the Agosta family’s BAMFA and Rossi Constructions, the 10-unit office in the Uni Hill precinct adjoins one of the childcare centres which comprises the group’s core business.

Eight offices have sold in the past two months for a total $8.2 million with average rates or more than $5000 a sq m.

Stonebridge Property Group’s Dylan Kilner and Max Warren, along with Jones Real Estate’s Sam Guest and Luke Peric, are handling the sales, under instruction from Advise Transact’s Mark Wizel.

“Given the 20-30 per cent rise in construction costs, buyers say they are paying below replacement cost,” Kilner said.

The offices were originally pitched as an off-the-plan deal but the pandemic got in the way.

Three of the units have been sold to investors, with the remainder to owner-occupiers.

The Uni Hill office vacancy rates sits at 3 per cent and investors expect to lease them up quickly, Guest said.

Local buyers, sick of public transport or driving in heavy traffic to office precincts further afield, are stoking the market.

“It’s a bit of a parochial buyer market out this way,” Kilner said.

Uni Hill, originally developed by MAB Corporation, is north of the Ring Road, opposite RMIT University and includes a shopping centre and a residential precinct.

Medical suites

It’s the end of an era for a Lennox Street property in Richmond built for Epworth Healthcare in the mid-1990s.

The four-storey building at 173 Lennox Street, opposite the Epworth Hospital, has a gross floor area of 2265 sq m with 20 consulting suites and a childcare centre on the top floor.

The hospital’s lease on the Epworth Medical Centre expires later this year as the Epworth has built a new high-rise specialist centre. It was developed and built in 1996 by the Shalit family.

CBRE agents Sandro Peluso, Jimmy Tat, Patrick Saccardo and Josh Jennings are handling enquiries, with Wizel from Advise Transact managing the process.

Peluso said the rent would depend on its continued usage as consulting rooms, or its potential to be a day hospital or a city fringe office.

Day hospital returns range from $25,000-$30,000 a bed, whereas current fringe office rents in the area are between $500-$600 a sq m.

The location, just off Bridge Road, is a little way from the Cremorne fringe market but could be attractive to investors or occupiers happy to pay for a refurbished rather than new office.

Elsewhere in Richmond, Australia Post has committed to 480 Swan Street. Dentsu and Monash IVF are going to 510 Church Street and HUB Australia has fresh space at 459 Church Street.

Toorak village

The former bank building housing Toorak Village’s Rokk Ebony Salon has come to market as the Toorak Road strip undergoes huge changes.

The listing comes weeks after the neighbouring Mercedes dealership sold to residential developer Orchard Piper paid $67 million.

The developer is planning a $400 million-plus mixed use precinct for the off-Toorak Road site. Last year, however, Orchard Piper also bought the 1000 sq m site down the road at 424-426 Toorak Road on the corner of Mathoura Road.

When Vicland’s $600 million development at 489-505 Toorak Road is added, that’s $1 billion worth of development in the blue-blood village.

The former Commonwealth Bank on the corner of Carters Avenue at 442 Toorak Road was built in 1934 and last changed hands in 1999 for $3.5 million.

CBRE agents David Minty, Nathan Mufale, Alex Brierley and JJ Heng are handling the expressions of interest campaign along with vendor advisor David Marks from Killen Thomas. They’re expecting more than $9 million for the site.

Rokk Ebony and other tenants pay $320,000 a year in rent for the 526 sq m building which is on a 540 sq m parcel of land.

Ocean views

The Great Ocean Road is hot now — not the mid-winter temperatures of course, but the investment market.

Fresh from last week’s sale of the Wye Beach Hotel and Justin Hemmes’ purchase last year of the Lorne Hotel, another piece of prime beachfront property is on the market.

It’s nearly 30 years since 106-112A Mountjoy Parade last changed hands. The Lorne Beach apartments have five shops on the ground floor and six two-bedroom apartments upstairs.

The property is on a 1341 sq m site and returns $354,678 a year.

JLL agents Josh Rutman, Nick MacFie and MinXuan Li are handling expressions of interest.

The property is expected to fetch more than $6 million.

While the Great Ocean Road has long been an international tourist attraction, it’s largely been run by locals and anchored by holiday-makers from Melbourne.

However, recent buyers on the west coast have come from Sydney where hospitality investment prices are driving investors south.