Unexpected sales that defined Melbourne’s commercial property market in 2022

Witches in Britches

The iconic Witches in Britches theatre where staff and cast members Courtney Lee, Joel Norman-Hade, Lauren De Iacovo and Elissa Sauzier perform, sold to a developer in 2022. Picture: Wayne Taylor.

Half a Melbourne office tower sold for more than $1bn, Witches in Britches snapped up by a developer and a Singaporean investment surge highlighted Melbourne’s commercial property market in 2022.

They join the state’s treasury making more than $60m selling an apartment building they compulsorily acquired for the ill-fated East-West Link project and a Flinders St hotel icon on the list of the year’s more prominent sales.

The year’s biggest single transaction was notched by CBRE, who sold a 50 per cent stake in the Southern Cross Tower at 121 Exhibition St to investment fund Charter Hall.

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It cost more than $1bn and wasn’t the investment management firm’s only significant buy, as they also snapped up a series of Mulgrave addresses for $84m as a future industrial development hub.

The $63.25m sale of the Evo apartment building at 109 Manningham St, Parkville, by JLL was also among the more notable sales.

The Victorian government spent $91m to buy out the 175 apartment owners in the building when the complex was compulsorily acquired in 2013 to make way for the planned East West Link.

The road project was then controversially scrapped by the Andrews government in a political stunt that cost the state’s coffers $1.2bn.

Ghost Street

The Evo Apartments in Parkville were sold by the government at a loss. Picture: Jay Town.

JLL Victorian capital markets head Josh Rutman said while a strong start to the year buoyed by pent-up demand from last year’s lockdowns had tapered into a lull as institutional investors grappled with increased costs for capital as the Reserve Bank of Australia raised the cash rate.

Despite this, a range of “more nimble” private investment groups had driven high-priced deals in recent months.

Remarkably, JLL research indicates that 72 per cent of office property sales in Melbourne’s CBD worth $20m or more had Singaporean capital involved.

“So there’s obviously a level of confidence that Melbourne had reached a low ebb, but had plenty of upside,” Mr Rutman said.

He noted that this had come as overall activity had decreased, accentuating the southern Asian nation’s appetite.

NOTABLE COMMERCIAL SALES 2022

Southern Cross Tower, Melbourne (121 Exhibition St, Melbourne) – $1.025bn (CBRE)

120 Spencer St, Melbourne – $321.25m (CBRE and Cushman and Wakefield)

330 Collins St, Melbourne – $236m (CBRE and Cushman and Wakefield)

85 Spring St, Melbourne – $130m (CBRE and Knight Frank)

Bunnings and Amart Hoppers Crossing (221-239 Old Geelong Rd, Hoppers Crossing) – $99.6m (Burgess Rawson)

Monash Pinnacle (745-757. 759-767 Springvale Rd + 300 Wellington Rd, Mulgrave) – $84m (CBRE)

570 St Kilda Rd, Melbourne – $67.6m (Colliers)

Evo apartment building (109 Manningham St, Parkville) – $63.25m (JLL)

545 Blackburn Rd, Mt Waverley – $60.25m (CBRE)

157 Lonsdale St, Melbourne – $52.5m (Colliers)

289 Wellington Parade South, East Melbourne – $51.785m (Colliers)

Hotel Lindrum (26 Flinders St, Melbourne) – $49.23m (JLL)

HomeCo Knoxfield (1464 Ferntree Gully Rd, Knoxfield)- $45m (Stonebridge Property Group)

Woolworths Eltham (7 Arthur St, Eltham) – $35m (Stonebridge Property Group)

272-282 Lonsdale St, Melbourne – $32.61m (JLL and Colliers)

Mitre 10 Glen Iris (15 Weir St, Glen Iris) – $31.375m (Stonebridge Property Group and Gross Waddell)

190 City Rd, Southbank – $27.255m (JLL and Colliers)

Nexus Business Centre (15-17 Goode St, Gisborne) – $23.17m (CBRE)

422-430 Johnston St, Abbotsford – $22.023m (JLL)

1087-1095 High St, Armadale – $18m (JLL)

Among the buyers were Singapore’s CapitalLand Investments, who bought a $321.25m office tower at 120 Spencer St, Melbourne, via CBRE and Cushman and Wakefield.

Another Singaporean group, HThree, claimed the title to 330 Collins St, Melbourne, in a $236m deal that was brokered by the same agencies.

But with local interest more suppressed, he said it was probable there could be a pick up in CBD activity in the new year as locals began to move again.

Local buyers did pursue iconic sites including the Hotel Lindrum on Flinders St and Witches in Britches, however.

The Hotel Lindrum on Flinders St was the subject of a major property deal.

Mr Rutman said the former would be developed by Melbourne firm Time & Place, with heritage protections that will retain the facade as they renew the prominent site as a city landmark.

“They will keep the facade as they make it an iconic development,” he said.

It is not yet clear what the new owner of the Witches in Britches site at 84 Dudley St, West Melbourne, plans for it.

Stonebridge Property Group national partner Julian White said a highlight for the year was the sale of the Glen Iris Mitre 10, which was the site of the population centre of Melbourne while it was still Tait Timber and Hardware in 2017.

Mr White said while the 15 Weir St property had a long history as a hardware site, it was likely its long-term future would be as a mixed-use development after the more than $31m sale earlier this year.

He was chuffed with the $17.05m sale of 333 Malvern Rd, South Yarra — where the Leonard Joel auction house has been based for a number of years.

With most buyers looking for modern office and commercial properties, the heritage listing’s sale at such a price was a significant increase from its last transfer at around $7m-$8m.

“These sorts of properties aren’t for everyone, as you need to work around heritage,” Mr White said.

“It truly was a year of two halves, very strong to begin and more challenged to conclude. However, we remain optimistic that it will be a relatively shallow correction, with very strong inquiry numbers and decent deal flow continuing throughout.”

121 Exhibition St, Melbourne - for herald sun real estate

Half of 121 Exhibition St, Melbourne, sold for more than $1bn.

On the auction front, Burgess Rawson chief executive Ingrid Filmer said the firm’s last portfolio auction in Melbourne had a 77 per cent success rate, despite the elevated cash rate.

“The interest rate rise has failed to quash investor appetite for quality properties with yields continuing to tighten,” Ms Filmer said.

Colliers Victorian head of investment services Daniel Wolman said the nationwide firm had watched Melbourne sales rise from less than one in five of deals around Australia in 2021 to more than a quarter in 2022. It was also above the long-term average.

“Sales of office buildings in Victoria has been taking an increasing share of the state’s total sales in 2022 taking up a 72 per cent market share,” Mr Wolman said.

“This is the highest share recorded over the past 16 years.”

The firm’s figures also showed that with $6.455bn in transactions sales volumes were down from last year but ahead of pre-pandemic levels from 2019.


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