661 bids: Marathon two-hour auction for Bourke St building
A Bourke St, Melbourne, building that hadn’t hit the market in 80 years is believed to have set a commercial property record after a two-hour marathon auction.
The five-storey building at 220 Bourke St went under the hammer on Friday, April 27, and sold for $15.205 million — a figure $4.205 million beyond its reserve.
Eight bidders emerged for the property, currently home to tenants including Cotton On, sparking the 661 bid battle.
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Colliers International handled the sale, and director Oliver Hay said a competitive start for the 201sq m building with 1170sq m of floor space had given way to a protracted contest that inched towards the sale price.
“The bidding started at $9.8 million and increased pretty quickly up to $13 million, and then up in increments of $1000 and $500,” Hay says.
“That represented a commercial record. The auctioneer was pretty exhausted by the end.”
The result was driven by a range of factors, particularly its location and profile, but emotional attachment to the building at the corner of Bourke St and Latrobe Pl was also a part of the success — with the bidding driven after the $13 million mark by Melbourne locals.
A private buyer from Melbourne won the title.
“A result like that was a perfect, transparent display of the depth of the CBD market,” Hay says.
“And it rerates the CBD market in terms of capital value and yield.”
The eight-figured sale price represented a 2.9% yield, and a rate of $75,646 per square metre.
The building currently returns $453,950 a year in rent.
Located about 300m from the Bourke St Mall, the property could potentially be developed upwards with a neighbouring building now at 11 storeys, according to Colliers’ David Sia.
The building was designed by architect Harry Norris.
An expressions of interest campaign continues to sell 274-278 Bourke St, Melbourne, within the Bourke St Mall part of the city centre.
Offers are due by 3pm, June 8.
It is expected to top $40 million.
This article from the Herald Sun first appeared as “Bourke St investment sets two-hour marathon auction record”.