SEVEN Melbourne CBD offices have recently sold for more than $11 million in total, demonstrating huge demand for central office space in the city.
Colliers International brokered deals for record sums on office spaces in the centre of Melbourne as demand for space increases.
Just last week, office spaces on Lonsdale Street and Collins Street sold for a total of $4.175 million and another office project on Spencer Street sold out completely four months ahead of completion.
"We managed to transact the four first-floor offices on Spence Street in the past five months for rates of $6,600 per square metre, which translates to transactions between $1.55 million and $2.6 million per office," says Colliers International's Chris Ling.
These sales are exceeding expected sale prices, with the Lonsdale Street office selling for $400,000 more than the most recent sale in the building which is a record price for office space in the Melbourne legal precinct.
The two suites sold on Collins Street went for $1 million and $1.75 million respectively, at rates of $9,616 per sqm and $8,835per sqm.
Ling says buyers are desperate to enter into the Melbourne CBD offices.
"We are experiencing strong demand from owner-occupiers who are desperate to secure CBD office space and as a result, both sales achieved market-leading capital rates," says Ling.
Historically low interest rates, and interest from local owner-occupiers and internationally based investors are driving the demand, according to Ling.
"We're seeing more and more clients transitioning from leasing to buying as a result of the current market conditions, in order to capitalise on lease expiries and the low interest rate environment," says Ling.
However, yields are dropping in the CBD, resulting in some cautiousness from some buyers uncertain as to what will happen to the boom in the near future.
Sale prices are spiking high in the CBD, with the Lonsdale Street office building selling for 25 per cent more than another space in the same building in September last year.
Ling believes the demand for CBD space currently outstrips supply, which is driving the prices up.
"We received more than 120 enquiries for this property and six genuine offers, underscoring the substantial lack of supply for well-located whole-floor office assets," says Ling.
Business News Australia
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