Trio of neighbouring properties in West Melbourne sold for $60m

Trio of neighbouring properties in West Melbourne sold for $60m

The sale of a West Melbourne office asset is the third in a trio of neighbouring properties to be sold by CBRE, signalling the ongoing confidence in Melbourne's commercial property market.

The 383 Spencer Street property is the last of three neighbouring properties sold to high-profile owners and takes the total sales tally to approximately $60 million.

CBRE says the combined total represents a $20 million uplift on the price paid for the sites in 2015 by Probuild founder Phil Mehrten, developer Ozzie Kheir and developer Frank Palazzo.

The last of the three, 383 Spencer Street, was sold for close to $7 million.

It is the smallest asset in the trio and is comprised of an 80 per cent vacant, three-level office building.

It follows the earlier sales of its neighbours: a vacant two-level warehouse at 102-108 Jeffcot Street for $9.5 million and a seven-storey former warehouse building at 355 Spencer Street for $38.5 million to separate investors.

Although there was a permit to build a hotel spanning all three West Melbourne properties, the sites were acquired on an individual basis.

"102-108 Jeffcot Street was sold to a residential developer while 355 and 383 Spencer Street have each been acquired by investors looking to undertake major refurbishment and reletting programs, which speaks volumes for the precinct's prospects," says CBRE senior manager David Minty.

"More organisations are looking to establish offices outside the CBD, allowing employees to work closer to home.

"By situating their satellite office or main headquarters in key precincts such as West Melbourne, Hawthorn and further out in the south eastern pocket of Mulgrave, businesses can offer their employees excellent amenity, shorter travel times and better parking options."

CBRE's Josh Rutman says the deal highlights that, despite the current climate, strong results can still be achieved in Melbourne's commercial property market.

"While some investors have more optimistic short-medium views than others, this latest sale and the competition from different buyer groups highlights that certainty is well and truly returning to the market," says Rutman.

Rutman says since the pandemic began in Australia his team has sold 23 commercial properties in Melbourne for a combined total of more than $220 million.

About 60 per cent of these transactions involved office buildings and 90 per cent of the assets had significant levels of vacancy.

"This is a leading indicator of investor appetite for high risk assets, with groups deciding to take a long-term view on the leasing market and future tenant demand after the COVID-19 health crisis," says Rutman.

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