Investor pays $40m for neighbouring Geelong offices

A high net worth Victorian investor has paid close to $40 million to buy neighbouring office buildings on Ryrie St, Geelong.

The deal to secure the buyer for 235 and 237 Ryrie St involved obtaining indications or precommitments from several tenants whose leases were set to expire in the next 18 months.

MP Burke Commercial’s Pat Burke negotiated the private sale in conjunction with Dawkins Occhiuto’s Andrew Dawkins, which sold with a yield of about 7.8%.

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The building at 235 Ryrie St also has a planning permit and advanced drawings for two new lightweight floors and a rooftop garden, which would add more than 2000sq m to the 1980s era building.

Burke says growth prospects are exceptional.

“Geelong has a strong local economy which is being fed with consistent population growth driven by affordable housing and increasing employment opportunities,” he says.

“Astute investors now have Geelong on their preferred list as a city which offers affordable investments with outstanding capital growth potential and the significant amount of inquiry we received has underscored that in no uncertain terms.”

Inside Harrison Place at 237 Ryrie St, Geelong.

The agents ended up with two strong bids, he says.

“We had good interest from Sydney, Melbourne and Geelong and toward the end of the campaign from a number of offshore buyers. But once we agree to terms we had to shut that down,” he says.

Burke says he couldn’t disclose the identity of the buyer.

“They own property in Melbourne and Geelong and their intention on these two buildings is to continue to improve the weight of average lease expiry,” he says.

Channels House at 235 Ryrie St, Geelong was originally home to Capital Building Society, which was taken over by Bendigo Bank.

“It is a passive investor who has got the capacity to take on some leasing renewals and leasing risk and square up the building leases.”

Burke says the buyer needs an indication that some tenants intend to recommit past 2018 and 2019, though options to find bigger or better space in the city is hard to find.

“A lot of the major buildings that are being built in Geelong have got full precommitment or are close to full, so it’s not allowing any more space to be freed up in the market for local businesses that may be seeking smaller areas from 800sqm to 2000sqm,” he says.

Channels House at 235 Ryrie St, Geelong was originally home to Capital Building Society, which was taken over by Bendigo Bank.

Dawkins says prospective purchasers are attracted to the security of the fully leased buildings, which returns more than $3 million a year in rental income.

Major tenants include Bendigo Bank, Victorian Regional Channels Authority, Morris Finance, Clinical Laboratories and the Victorian Department of Human Services.

Inside Harrison Place at 237 Ryrie St, Geelong.

Dawkins says the potential to elicit increased income from further development at 235 Ryrie St and the real prospect of rental upside from both properties reflects what is a strong result for the vendor but at the same time a very good proposition for the purchaser.

The buildings are the latest in a series of prominent Geelong sales, including $115 million for the TAC’s Brougham St headquarters, $117 million for Leopold’s Gateway Plaza shopping centre and $37 million for Newcomb’s Bellarine Village Shopping Centre.

This article from the Geelong Advertiser originally appeared as “Neighbouring Geelong city office buildings sell for $40 million”.