melbourne non cbd office - knight frank · 2017-02-12 · vendor: investa office fund (iof)...
TRANSCRIPT
RESEARCH
MELBOURNE NON CBD OFFICE TOP SALES TRANSACTIONS 2016
Key Facts
More than $2.5 billion was
transacted in Melbourne’s St
Kilda Road, Southbank and
Suburban office markets
The sales volume within the
Suburban and Southbank
office markets both reached
record highs in 2016
Singaporean-based
investors led all offshore
purchasers followed by
Chinese and US-based buyers
Offshore investors were the
most prominent purchasers
accounting for 56% of sales,
spending $1.44 billion
RICHARD JENKINS Director—VIC Research
Follow Richard at @RJenkinsR
Office investment activity in the Southbank office market reached record highs, with sales totalling $1.22 billion, including Melbourne’s largest office sale in 2016—the Southgate Complex for $578.0 million.
An all-time high level of sales volume
recorded in the Suburban and Southbank
office markets contributed to the highest
ever level of Non-CBD office investment
activity, surpassing $2 billion for only a
second time ever.
Office investment sales activity ($10m+) in
the Melbourne Non-CBD office markets over
2016 totalled $2.58 billion across 35
properties. The volume of sales achieved in
2016 was 185% higher than the long term
average, and 22% higher than the previous
record high level of 2014.
Non-CBD office investment was led by sales
in the Southbank office market. Southbank
office properties sold in 2016 accounted for
48% of all transactions (by value), followed
by Suburban offices which accounted for
39%.
Within the suburbs specifically, the Inner
East precinct was the focal point of
investment activity accounting for 45% of all
suburban office transactions (by value) with
$443 million spent in the precinct. Investor
appetite for City Fringe office properties
remained strong accounting for 33% of total
suburban office sales in 2016.
FIGURE 1
Melb Non-CBD Office Transactions $ million total transactions ($10mill+)
Source: Knight Frank Research
0
500
1,000
1,500
2,000
2,500
3,000
2010 2011 2012 2013 2014 2015 2016
ST KILDA ROAD SOUTHBANK SUBURBAN
2
Offshore investors led all purchaser types
accounting for 56% of sales by value,
spending $1.44 billion, boosted by major
assets located in the Southbank office
market. Starved of investment
opportunities in the CBD office market,
offshore investment was four times the
long term average and more than double
the previous high of $616 million set in
2015.
The offshore investment across
Melbourne’s non-CBD office markets in
2016 was dominated by Asian-based
groups, led by Singaporean and Chinese
investors. US-based investors, however
were also active, accounting for 23% of
cross-border investment into
Melbourne’s non-CBD office markets in
2016 with the acquisitions of Building 10,
658 Church Street, Richmond ($45.5
million) by BlackRock and 28 Freshwater
Place, Southbank ($286.0 million) by JP
Morgan Asset Management.
Investor appetite was focused on Core
Plus/Value Add opportunities accounting
for 73% of all purchasers. Interestingly
acquisitions of non-CBD offices
purchased for a change of use, fell for the
first time in three years. In total $213.1
million of non-CBD offices were
purchased for a change of use, down
from the $408.9 million recorded in 2015.
FIGURE 2
Melb Non-CBD Office Transactions Breakdown by purchaser type ($10mill+)
Source: Knight Frank Research
NON CBD OFFICE TOP 10 SALES 2016
Price: $578.0 million
Date: August 2016
NLA: 76,208m² ‡
Rate/m2 of NLA: $7,585
Yield: confidential
1. SOUTHGATE COMPLEX, SOUTHBANK
Vendor: DEXUS
Purchaser: ARA Asset Management & Entities
Comments: The Southgate complex contains
two A-grade offices, the HWT tower (30,124m2)
and the IBM Centre (36,228m2) plus a three
level retail plaza (9,856m2).
Price: $286.0 million
Date: August 2016
NLA: 33,992m²
Rate/m2 of NLA: $8,414
Yield: 5.91% core market (6.54% initial)
2. 28 FRESHWATER PL, SOUTHBANK
Vendor: GPT / Frasers Property Australia
Purchaser: JP Morgan Asset Management
Comments: Completed in 2009, the fully
leased A-grade 26 level tower is leased to a
range of tenants including Incitec Pivot, CPA
Australia and WSP Parsons Brinckerhoff and
was sold with a WALE of 3.56 years.
Price: $202.7 million
Date: May 2016
NLA: 25,693m²
Rate/m2 of NLA: $7,889
Yield: 5.98% initial
3. 650 CHAPEL ST, SOUTH YARRA
Vendor: Mirvac
Purchaser: Newmark Property Group
Comments: The Como Centre, also
includes 6,650m2 of retail space, a 113-room
hotel and a 614-bay car park. The office
component is spread across four towers.
Price: $166.0 million
Date: June 2016
NLA: 23,811m²
Rate/m2 of NLA: $6,972
Yield: 6.85% core market (6.80% initial)
4. 75 DORCAS ST, SOUTH MELBOURNE
Vendor: SachsenFonds
Purchaser: Growthpoint Properties
Comments: Constructed in 2002 and partly
refurbished in 2015, the 11-storey A-grade
office is fully leased to the ANZ Bank (57.7% of
NLA), Mondelez (19.2%) and BMW (15.4%) and
was sold with a WALE of 4.5 years.
Price: c. $160.0 million tbc
Date: October 2016
NLA: 20,000m²
Rate/m2 of NLA: c. $7,500
Yield: n/a
5. 12 RIVERSIDE QUAY, SOUTHBANK
Vendor: Exxon Corporation
Purchaser: Loi Keong Kuong
Comments: Purpose-built for ExxonMobil
in 1995, the office sits on a large site
overlooking the Yarra River. The vendor is
expected to remain in a short-term lease
prior to relocating.
Price: $140.5 million (50% interest)
Date: September 2016
NLA: 39,400m²
Rate/m2 of NLA: $7,132
Yield: 5.45% initial
6. 800 TOORAK RD, HAWTHORN EAST
Vendor: Investa Office Fund (IOF)
Purchaser: Charter Hall Direct Office Fund
Comments: The Melbourne office
headquarters of Wesfarmers’ subsidiary
Coles is 100% leased to the Coles Group for
an initial 15 year lease term expiring March
2030.
AREIT
DEVELOPER
OFFSHORE
PRIVATE INVESTOR
UNLISTED/SYNDICATE
10%
3%
56%
11%
20%
‡ includes 9,856m2 retail space
3
RESEARCH MELB NON CBD OFFICE—TOP TRANSACTIONS 2016
7. 5 QUEENS RD, MELBOURNE
Price: $116.3 million
Date: December 2016
NLA: 17,720m²
Rate/m2 of NLA: $6,659
Yield: 5.90% core market (5.60% initial)
Vendor: Charter Hall Office Trust (CHOT)
Purchaser: Tong Eng Group
Comments: The A-grade office, sits at the confluence of
Queens Road, Kingsway and St Kilda Road, and offers unrivalled
protected views over Albert Park and Port Phillip Bay.
9. 452—484 JOHNSTON ST, ABBOTSFORD
Price: $80.8 million
Date: June 2016
NLA: 16,577m²
Rate/m2 of NLA: $4,875
Yield: 6.56% initial
Vendor: Computershare
Purchaser: LYZ Property Group (Hengmao Group)
Comments: Computershare has an initial seven-year, triple net
leaseback over the facility with options until 2029.The property
sits on a 16,920m2 site with frontage also onto the Yarra River.
8. 350 WELLINGTON RD, MULGRAVE
Price: $87.6 million
Date: April 2016
NLA: 21,125m²
Rate/m2 of NLA: $4,147
Yield: 7.50% initial
Vendor: Frasers Property Australia
Purchaser: Stockland
Comments: Located on a 2.2 hectare site, the business park
comprises of three office buildings, fully leased to Kmart, Toll and
Coles Group, and sold with a WALE of 8.69 years.
10. 553 ST KILDA RD, MELBOURNE
Price: $70.0 million
Date: November 2016
NLA: 10,316m²
Rate/m2 of NLA: $6,785
Yield: 7.30% initial
Vendor: IHC
Purchaser: Nikos Property Group
Comments: Was part of a two-asset sale (other being 541 St
Kilda Road which was sold for $48 million) by the vendor. 553 St
Kilda Road was sold fully leased with a WALE of 6.4 years.
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Map Source: Knight Frank Research
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RESEARCH & CONSULTING
Richard Jenkins Director—VIC Research
+61 3 9604 4713
Kimberley Paterson Senior Analyst, Victoria
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Head of Research and Consultancy
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VICTORIA
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