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A partially refurbished and mostly vacant office tower in Melbourne's St Kilda Road precinct has sold for close to $18 million.
The property, at 1 Bowen Crescent, was originally built by trucking magnate Lindsay Fox as offices for his Linfox company.
The seven-level building last changed hands in 2017 when it was sold on behalf of philanthropist and tech entrepreneur Malcom Freake.
CBRE's Josh Rutman, part of the negotiating team for 1 Bowen Crescent, says the sale of the tower is the latest in a string of major sales in the precinct.
"Vacant building sales are the purest test of investor confidence, particularly given the amount of equity required for these transactions," says Rutman.
"The result for 1 Bowen Crescent is the latest example of investor confidence in the St Kilda Road precinct, despite some concerns about disruptions from the construction of the new train station."
Rutman noted the sale also highlighted a resurgence of interest in St Kilda Road's office prospects following a series of residential conversions in recent years.
"As the Melbourne CBD market continues to tighten, with rents pricing many tenants out of the market, St Kilda Road has a newfound relevance in the Melbourne office landscape, with several buildings recently achieving rental deals of over $500/sqm," says Rutman.
"The building rate achieved for 1 Bowen Crescent was over $7,100/sqm for a vacant office needing major re-positioning - and one without a traditional St Kilda Road address. This closely aligns with some of the recent building rates achieved for St Kilda Road's best, fully-leased investment offerings over the past 12-months."
CBRE's Lewis Tong, also part of the negotiating team, says several major St Kilda Road residential projects proposed for sites occupied by older style office buildings had been reoriented back towards commercial use in response to current market conditions.
"With minimal office stock on the market in the Melbourne CBD, there has been a gravitational pull towards St Kilda Road, with many Asian groups seeing the precinct as a strong prospect, especially given the recent positive statistics for net effective rental growth," says Tong.
"We saw this exact trend play out at 424 St Kilda Road, where a major player out of Asia bought an existing office building for refurbishment after the previous owner was intending to carry out a high-end residential project on the site."
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