Secure Government Leased Building In CBD Fringe With Huge Land Bank Upside
One of the best commercial property opportunities of 2023 has come to the market, offering secure income from the Australian Government, with longer-term development potential in the booming inner-western suburbs.

Fitzroys’ Paul Burns and Rob Harrington are marketing the 2-level office building occupied by the Australian Government at 75 Moore Street, Footscray for sale via Expressions of Interest closing Wednesday, 25 October at 12 noon.

Purpose-built for Centrelink in 2012, the property comprises 2,259sqm of offices across large floor plates with excellent natural light on 3 sides, plus 40 basement car spaces. It currently returns $1.065 million per annum net.

Properties of this type and in this location typically show a circa 6% yield.

Burns said the vendor acquired the building prior to the end of the initial 10-year term, with a view to renewing the lease to Federal Government. Despite the tenant having a 3-year option, the tenant extended for 7 years from 2022, plus options.

“The tenant agreeing to renew for a longer term reflects the Governments intentions, and the fact they did not have, or expect there to be, any options, in the near term” Burns said.

“The building is only 250m from Footscray train station, metropolitan Melbourne’s busiest train station. Centrelink offices need to be highly accessible to public transport so renewing was an easy decision for them,” he said.

“75 Moore Street is an excellent passive investment, with the added bonus of being an exceptional land bank in one of Melbourne’s most rapidly gentrifying and trending city fringe locations.

“Passive investors will be attracted to the ultra-secure lease covenant to the Australian Government. The building is very modern with limited or no capex requirements.

The 2-level office building is on a 1,697sqm land-rich Activity Centre-zoned site with additional frontages to Byron and Shelley Streets that allows for significant medium and long-term development potential of up to 10 levels.

“We’ve already received interest from developers looking to put away an asset for the next cycle,” Burns said.

“A high portion of the purchase price will be accounted for by the land which has further upside.”

Harrington said Footscray is the gateway to Melbourne’s booming west and a massive infrastructure pipeline.

“The timing for investors and land bank buyers to enter this emerging market could not be more opportune.

“Footscray is currently undergoing a major urban transformation. The suburb’s rich blue- collar and manufacturing history and inner-city location has made it attractive to a new and dynamic demographic. A blend of young professionals, families, students and ‘empty nesters’ now give the trending suburb a unique Melbourne character, and is generating ongoing demand for residential, build-to-rent, retail, and office developments.

“The property’s location is only going to be enhanced by the billions of dollars being invested in infrastructure in the area, including the Westgate Tunnel, Footscray Hospital and Metro Tunnel.”

Another Owner-Occupier Buys Metro Office Building
Pixel Technologies has reportedly acquired an East Kew office building, on the edge of the Harp Junction, for $23 million.

The 677 High Street building follows the $19 million sale of 2-6 Southampton Crescent in Abbotsford, negotiated earlier this year by Fitzroys’ Paul Burns and Chris James. The 6,048sqm building is 28% leased to ASX-listed Starpharma, and the new owner is a self-storage operator that intends to reposition the building and utilise an approved permit for surrounding land to create a self-storage complex.

Also in Abbotsford, Harry the Hirer founder Rick Jamieson bought the vacant 112 Trenerry Crescent for a reported $30 million from the Zagame family. The former Austral Silk and Cotton Mills factory is now a 4-level office building.

The High Street deal follows the sale of another inner-east office building, in Kew, for between $17 million and $18 million to Qanstruct. The 2,286sqm building at 85-87 High Street is on a 1,840sqm site with planning approval for a 10-level, 118-unit apartment project.

Other Melbourne metropolitan office deals this year have included United Petroleum founders Eddie Hirsch and Avi Silver buying a vacant 2,739sqm Hawthorn building that was formerly Bunnings’ offices for $17 million, while ASX-listed Garda sold 436 Elgar Road in Box Hill for $40.3 million, reportedly to Barwon Investment Partners’ healthcare fund.

First Collins Street Office Deal For 2023 Lands
A local investor has paid about $30 million for the 406 Collins Street building, in the Melbourne CBD thoroughfare’s first major office sale in 2023.

The 12-storey, 3,861sqm building, on a 411sqm site, was offered with a fully leased net income of more than $1.759 million. Current tenants include tech firms and marketing businesses.

It last sold in 2016 for $23.1 million, which showed a 4.43% yield.

Designed by H. Garnet Alsop, 406 Collins Street was built in 1958 and has a curtain-wall glass façade. It has “significant” status under the Melbourne Planning Scheme.

Major deals in the Melbourne CBD in 2023 have included private investor Jimmy Goh’s $35 million purchase of the 85% occupied B-grade building at 333 Queen Street, on a 4.6% yield, while 99 Queen Street sold for $30 million.

Strong Result for Strata Industrial Investment
A strata industrial investment with an excellent tenancy covenant and located in a prime south eastern location has been sold under the hammer for $2.014 million.

Private investors traded the property, B12 & B13, 2A Westall Road in Springvale, which was sold through Fitzroys’ Brent Glassford, Marco Sandrin and Lewis Waddell in conjunction with Patrick O’Callaghan of O & Co.

The combined property totals 586sqm of floor space, 490sqm of which is occupied by Ambulance Victoria on a secure 7+7-year lease term from April 2020 with 7 car spaces.

The balance is leased to Promotional Clothing on a 2+2-year term from August 2022 and includes 2 car spaces.

The sale price reflected a strong 5.25% yield for a strata-titled office warehouse.

Glassford said the property was well-received by investors, with multiple bidders on auction day and the property selling above reserve.

“We anticipated strong interest in this property given it has a great essential services tenancy covenant, being leased to Ambulance Victoria, and its superb prime south eastern location.

The site is at the corner of Westall Road and Centre Road, just moments from the Princes Highway and Springvale Road,” he said.

Sandrin said the site offered both security of income from the long Ambulance Victoria lease as well as excellent rental prospects and growth potential in the coming years.

“Fitzroys is forecasting further rental growth in Melbourne’s south eastern industrial market amid historically low vacancies, with overwhelming demand for high-quality facilities in well-connected locations to cater to higher inventory and storage space demands and last-mile efficiencies,” Sandrin said.

Eagers Automotive Takes Control of Dealerships
ASX-listed Eagers Automotive is taking control of a portfolio of Melbourne and Mornington Peninsula car dealerships, in a $245 million that will also see it acquire a total of 5.35ha of land.

The deal includes ownership of 3 dealership properties in Brighton and Mulgrave, while it will lease the balance of the properties in the portfolio from the sellers and 3rd parties.

The property component accounts for $100 million of the deal.

The seller is Nick Politis, who holds a 27% stake in Eagers Automotive.